Engineering economics

Moral: Wherein we look at the engineering of economics. This post's motivation comes from seeing the FT review of Rick Bookstaber's and Nassim Taleb's testimony before the US House of Representatives' Committee on Science & Technology.

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As mentioned last post (see Remarks), having recently run into Rick's blog is cause for a pause to catch up, since I have been paying only cursory attention to the use of technology in the markets since other technology was so fascinating.

Like what? Well, technology such as engineering computing that allows complex systems like an airplane to be designed and tested. The modern processes and materials are vastly different from what they were 20 years ago, as are the computers.

From looking at Rick's recent posts on high frequency and algorithmic trading, which go into some technical detail, I can see some of the parallels that I had expected (see Econ/Eng). For one, both have a problem with determining value, albeit it's 'fair' in finance and 'earned' in engineering. There is more than a tenuous link here which I intend to show as this is a problem that has been exacerbated by technology, not helped.

But, what can we do? For one, we can define and put into place an economic sandbox. Ah, what might this thing and why now? That is the work that we have to do.

Perhaps an aside is in order. I may have spent a large part of my career in engineering computing, but my degrees are in Economics with a mathematical focus. During the other times, the focus of my work was operations, and management, research. Hence, I'll have to admit some affinity with those worrying about risk management. Too, I spent a lot of time working issues related to knowledge and computational modeling (KBE).

Both engineering and finance have been a focus in this blog, albeit seeing a lot of fiction in finance (Rick says stranger than fiction). One thing about finance's use of technology is that the game aspect dominates any science for several reasons. Well, engineering companies like to make money to boot. Yet, in engineering, we go up against nature.

Which, by the way, the quants bemoan, that they have to deal with unpredictable humans. Hence my having up close exposure to the underpinnings, and problems, of our house-of-cards led me to look for causes to problems that are, well, cyclical. The trouble is that we don't seem to be learning the right lessons.

For instance, I started a list related to finance earlier this year. Engineering does learn, just witness the marvels all around.

One first lesson might be to accept that striving and gaming will not resolve intractable, essentially undecidable, issues. That applies almost everywhere. In finance, near zero is real, folks.

There will be more posts related to Rick's work.

Remarks:

05/28/2011 -- Lemons problem, dark pools, ... Oh, so much to look at! Avatars, too.

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

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

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

11/29/2009 -- Rick is now with the SEC.

10/05/2009 -- Ah, yes, on the behalf of.

09/21/2009 -- Yahoo Finance talks about the decline in youngsters going into finance. That sector, finance, grew faster than any other for a couple of decades. How useful was that?

Modified: 05/28/2011

Financial engineering I

Moral: Wherein we take a long, deep look at what is behind the drive to financial engineering (see, an early opinion).

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This re-consideration is long overdue. Notice that the opinion mentioned in the above Moral dates from 2008. At that time, there were glimmers of problems to come. Many potential causes for the problem seemed to go back to misuse of mathematics and computation, from what I read. Of course, it turns out that these mainly caused things to be worse. That is, the problems date back to age-old human issues, such as greed, sheer stupidity, behavior and thinking that bordered on sociopath'y, and more.

Turns out that we had no perp walks (the abundance of rogues, notwithstanding). Of course, we also had all sorts of side-lines. Made-off took off some of the edge. He was punished as his type of shenanigan was easy to grasp. Not so much for those who used financial engineering as an umbrella.

Then Ben coddled the market'eers. But, we'll get back to all that.

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We are going to use MIT as a focal point for discussing financial engineering (see their blog). Evidently, in terms of academia, the Polytechnic Institute of New York University was the first to have a department certified by The International Association of Financial Engineers (wiki page). Notice that they got started in 1992. That's new, relatively.

However, they are affiliated with something that I'm associated with: SIAM (Society for Industrial and Applied Mathematics). Note that SIAM dates from 1951.

Aside: Comparing organizations by their time of inception can be interesting. IEEE dates to 1963, however it's predecessors dated from 1884 and 1912. SAE dates from 1905. IChemE formed in 1922. The older societies are by-products of the evolution of industry, its tools and practices. Later groups, many of them, have a heavy emphasis on computational approaches (my bailiwick, foks). So, the IAFE is new; too, what they're proposing, and doing, is very much dependent upon advanced computing.

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Before talking more on motivations (both for me and the IAFErs and in general), let's look at what can be read on Wikipedia: Financial Engineering, Computational finance, ..., Criticisms, ..., Securitization, ..., Risk (say of tranching), ...

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Motivations? Whatever money is we can agree that having enough is a worry for a lot of folks. Then, some folks seems to have too much. A sensible person, with a lot of dough, would want to use it for good purposes. All sorts of things come to mind: take care of the poor, help make a better future, etc. An example is this paper at the MIT site: Commercializing biomedical research through securitization techniques (see the paper).

That sounds like a good idea, right? It's far removed from some who seem to want to just make more money, in greater and greater heaps.

Recently, the WSJ had an article about Blackstone's plan (the Comments are interesting) to use financial engineering. In this case, they have bought 10s of thousands of houses (foreclosures, probably obtained on a dime). These will be rented. Okay. They want to be a landlord. That's nice (as long as they're more than the slum landlords that seem to crop up here and there). But, then, that's not enough (property management); they, Blackstone, want to package this whole thing so that they can sell bonds. Ah. Well, it's clever. Too, they might find buyers even if they cannot get ratings.

Aside: as we saw before, this type of thing was sold as cash-equivalent with ratings that were sky-high -- AAA, even. Many ate losses; some [were of] large, [staggering amounts] (some may not have unwound, yet, thanks to Ben). Can they, [this approach and these bonds], get ratings now?

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The thought about tranching holds but is under review. Though there seems to be a lot of silliness involved, there actually may be something of value to these ideas. So, we'll look at that, next. [Recall, the early characterization was that it looked liked searching for something from nothing (as in, perpetual motion).]

Remarks:

11/24/2013 -- The ACM has a review article on algorithmic trading that everyone ought to read. Essentially, if we use a plane as an example (consider what Boeing has had to do to get the 787 out and about), we would say that the financial folks are putting passengers on experimental aircraft with little regard to their safety and comfort. The whole notion is atrocious. How does it happen? They've coached things in mathematics and computerese, plus they've bastardized Adam Smith's ideas. Where is our sandbox, and where is the stable economic system that we can build?

09/18/2013-- Pop, fizz, ... Ben had to show largess because of idiots who ran the economy to the ground (rogues all around). Ben is going. What do we have to look forward to? Businessweek has a review issue (of the past five years). Several articles are especially interesting. Too, phrasing shines: spin dross into gold (in relation to mortgage bonds). Perhaps, we'll get back to some of the more pertinent ones, at some point. If we do, it would be to bring forward what has been said here, from the beginning. To wit? Tranche and trash (WSJ has a good take on that). Securitization? This article brings on weeping (one example of the misuse of mathematics and computing that has been harped about). Adoption, and improved understanding, of lazy evaluation let loose the powers that resulted in the wild web and its little children, namely social media and more. To grasp the problem, we have to go back to computing that is in some type of responsible area. Avionics comes to mind. If what is couched as software in looser domains (financial engineering? -- looser?, yes bailouts are the norm despite all of the protestations of the ruling elite; or the whole cadre of the poorer folk can just suck it up when there are problems in order to relieve the fat cats' loss) were to used in flight controls, would we not have planes falling out of the sky? We'll get back to the simple issues that seem to not be seen by the elites chasing after the bucks that Ben has been throwing out of his helicopter.

08/23/2013 -- Another example. Jon has it right: high-frequency to blame. Of course, there are several reasons for the market being out of control.

08/12/2013 -- The President of the US is talking about changing the mortgage game. For one, Fannie and Freddie would change dramatically. The WSJ reported that these ones are making oodles of money (if so, it's due to Ben's free money). We'll have to weigh in here, at our speed, of course. For one, we'll lay out the progression that got us to use of the CDO in the mortgage context. Fancy, creative finance is what drove these things. Too, we'll consider what ought things look like (look, there have been many changes for the past 100 years or so; a look at these issues from a temporally unbiased manner is imperative.

08/08/2013 -- The comment at MIT (as in, Massachusetts Institute of Technology) was rejected. It can be found below (08/02/2014). Over the years, I've lost a lot of comments that way as I didn't record the material prior to submit. By the way, MIT, one of my academic advisers during my studies did his graduate work at, and was degree'd from, your place. Of course, there are plenty of other institutions in the Boston area (however, the Cambridge pair (disclosure: I have more than a passing interest in New England -- all aspects -- due to its historical significance in the supposed dream of mankind) make an interesting couple).

08/05/2013 -- If things continue as they are going, in finance, the markets will die. They'll become warped caricatures of themselves which cannot attain long-term viability. The contributions of Financial Engineering are pushing, in many cases, to this type of unhealthy status. Yet, what else is there? So, people are piling into the equity chimera. It is guaranteed, that most will be losers. In fact, over the long term, we can show that no height of miscreant gain can offset the depths into which the majority are being trampled. Hopefully, this time around, we will learn something. Frankly, I wasn't aware enough to know what was going on last time. It took awhile for my head to accept that the idiots had us tied up. I've been slapped silly since and expect this to go on. Doves have the power, right now. And, you know that the peace twig is only for the Wall Street types. One would hope that something like FE would bring in the proper ethical view. We'll see. In the meantime, I'm going to get more into the misuse of mathematics. You would not expect this from MIT (wait! have not engineers been behind some of the largest banes of mankind as well as providing their wonderful boons? -- we'll venture, audaciously, into reviewing the balance there - as in, which is the larger set: boon, bane?). ... Age-old issues continue to plague us (more than the royal we). One would think that, perhaps, we could learn at some point (why not now?).

08/02/2013 -- Put the following comment, here, at MIT: I appreciate that you have this blog that I could run across (“what took me so long?,” I wonder – as I first ran into FE (as in, became aware of it) in the 2008 time frame with a reaction of incredulity – more below). Perhaps, the blog can be used to lead consideration of those things that cause us to build upon “sand (financial and otherwise)” when we ought to know better.

But, such a discussion would go beyond mere emphasis on the analytic frameworks, as even with modern computational assistance, such views are incomplete. That, of course, is arguable, especially when FE has been used to pad pockets (near-zero reality spreading that gain across the multitudes as losses). One thing that we all know is that money has its power. Finance needs more than ethics (see below) as a counter-balance.

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Now, FE is what? If it is “engineering” as a discipline, upon what science is the endeavor based? I have not seen a good definition. Please point me to one.

I hope that the response is not economics (which we all know is dismal). But, if it is, then one would hope that there would be an experimental basis with which to evaluate long-term consequences of decisions made within this domain’s purview. And, that basis would have well-defined ways and means to handle the inherent complexity (suggesting, of course, core issues with computing).

Now, if the basis is purely computational mathematics, then we must even more stress the need for a “scientific” mindset, abetted with liberal doses of proper consideration for quasi-empirical notions. From what I’ve been seeing (observer), the current focusing on “algos” leaves a lot to be desired (say, as compared to the discipline found with product engineering). Especially does this seem to be true with FE (again, looking in as an outsider).

This past downturn has been followed with all sorts of changes (some from the FED’s actions) that have not been tested in any reasonable sense (except, perhaps, for their ability to pull money from pockets). In fact, if FE has a strong computational finance flavor, where is your test bed and laboratory? And, before that, the necessary methods and their metrics (broad sense assumed)?

This comment is not looking for flip answers. MIT has a strong presence in FE, from what I’ve seen via search results. A good start would be to lay out something that we could agree upon as the basis for discussion.

I’m not talking FE 101 as the deep philosophical issues (well beyond ethics) would come to the fore, immediately. Such is the importance of the discipline. It is where advanced computation (with the whole gamut of connotations) and what we value and use, as money, intersect.

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Everywhere I look, there is void (absence of ethics and more?) except for silly notions of game theoretic concepts as the foundation for our future. GT is no more than one of the tools that need to be applied (from whence [is] its use as an over-arching worldview?).

Is it [not] true that Finance, and its engineering, would need to build more than chimeras for us to expect (yes, uncertainty and risk cannot be avoided) a sustainable future for ourselves and our progeny?

Modified: 11/24/2013

econfuture.wordspress.com

Moral: Wherein we leave Ben alone for awhile and see what ought to be important to the future so that we have the best for the most.

As in, no economic torture (one type), for one thing. There is a lot more to look at.

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Earlier, we mentioned a few blogs. We have some on a blog roll. Today, via the CACM (member of ACM since the 1970s), I found another that I'm adding to the blog roll: econfuture| Future Economics and Technology.

The topic of the blog, Economics and Technology, deals with important issues. The particular post that I first saw asks this question: Could Robots and Automation cause an Unemployment Crisis? The post has a link to the CACM article (nice, thanks).

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This post is mainly to point to the blog and to change the subject of focus, for awhile. I worked in applied AI (think of this being analogous to applied mathematics) since the early 80s. The particular discipline was Knowledge-Based Engineering (I consider myself a KBEvangelist, of sorts - except, perhaps, I've broadened the basis, of late). I was involved with a wide-range of applications, heavily involved with applying mathematically-based computing. From this, my look at truth engineering was a natural flow.

Aside: My degrees are in economics during which study I emphasized the overlap between economics, mathematics, and computing. The leaning toward AI came from an interest in the development of cybernetics. See this little section, that I wrote, about some thoughts on where KBE might go. Note, please, that engineering is being looked at as applied science (yin/yang). The computer? It does a lot of water muddying; essentially, things get topsy-turvy, thereby (see quasi-empiricism, operational aspects).

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So, let's end, for now, with the consideration of near zero being said as of importance. That is to show, of course. Too, all this running after computational assists is problematic from many senses and sides. We'll get to that, folks. In other words. the economy, as defined by markets (especially those of the chimera type), are a house of cards.

Now, one future employment opportunity will be to ride these things. Think of it this way. We have idiots now, pushing out what they see as advanced systems, who have no idea of the side-effects of these things. You see, as long as it fills the pockets of the right people, then who cares? Or, who can fight big pockets?

Aside: Being, which currently is  being suppressed in these realms - as in, no consideration given, thereof, always wins. This is not metaphysically driven, either. It's the reality that has not allowed itself to be over-layed with our mathematical constraints (we'll get to this again).

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Now, the issue of who will the be bull rider is complicated. There will be a whole lot of intuition involved (trained, of course). Too, though, there very well will be non-elite players. You know, what I am referring has not been recognized, nor looked at, except, perhaps, for some little nuances being looked at by forward thinkers. My hope is that the likes of the elite (of certain types, for now), like the Harvards, will get into the game. To do so will require them to consider that autodidacts aren't silly willies crying "wolf" (or bemoaning lack of genetic makeup, educational opportunities, and the whole list of other things what can lead a person's life to the less than desirable).

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As we have seen with the web, all sorts have made money, and success (other types), without the imposition of the top-heavy academic regimen. Non-elite contributions will become a central core issue.

Aside: Any consumer driven economy must allow for means for those consumer's to do their thing without the load of debt (that, folks, is a side-effect of the current regimen that went (ought to have gone) out decades ago).

Remarks:

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

08/05/2013 -- Let's see. Financial Engineering needs some attention. Perhaps, with the likes of MIT involved, this discipline can learn to lead the way out of the morass. Expect more on this topic. If things continue as they are, markets will be pure chimera (as in, ca-pital-sinos). Investors? We'll go on about that, too. It's guaranteed that most in the equity markets will lose. Why is that not talked about by those heads we see daily yakking on TV and newer media? No, they would rather go gaga (apologies to the Lady). So, we'll have to address this issue: the point (price) at which loss outweighs any gains to date. All cannot sell to make a profit. Now, there is a way that all could sell high (government as the buyer of last resort - Ben has been doing this, albeit with bonds - yet, it frees up money that can go to equities -- government? of course, taxpayers). We'll have to look at the misuse of mathematics; plus, doers need to be brought back to a respectful position.

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

07/30/2013 -- Oh yes, Watson, and its ilk, will require some thoughtful consideration. You know, that whole thrust makes the human-oriented issues more important.

Modified: 02/26/2014

Economic sandbox

Moral: Wherein we consider a sandbox. In several posts (see below list), 'sandbox' has been used to either characterize gaming that is risky (sandboxy) for more than just the players or to denote a better process, using as an analog the role that labs play for the test engineer. That is, filter out the toxic from the secure instruments.

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Think of it this way. A new plane is seriously tested before people fly the thing. Even the test pilots don't just jump in and take off. Where is there some correspondence to this notion in economics?

What we've seen is creative spawning of instruments as if by necessity. Then, in the past year, we've seen 'shooting from the hip' by some cowboys (right and left, there have been processes changed and adopted, seemingly without caution); too, those in the position to rake in the dough are doing just that; the taxpayers, and savers, are being sacked.

One motivation: describe and establish a mechanism to put the game players where their impact is limited. We do not need this supposed 'creativity' of the best-and-brightest that seems to persist in creating dire consequences for the majority.

So, for starters, let's look at the posts that used 'sandbox' and start this necessary discussion. The following are three groups of links to post with some comment about how it relates to the sandbox imperative. The post are listed from latest to earliest in time.

• Educational Institutions (Sep 09) -- As with engineering and science, these institutions ought to be where sandboxes evolve, not in the for-profit side of business.
• Computation, finance and engineering (Sep 09) -- Even Nobel winners were amiss, big time.
• Spitting in the wind (Sep 09) -- The sandbox would isolate effects until something is proven.

• Roles for schools (Sep 09) -- As mentioned earlier, labs are an accepted fact in institutes of higher learning.
• Modern finance (Oct 08) -- Where did the notion arise that people could play games with other people's money using what are essentially untested processes? Does fiduciary duty mean anything?
• Easy steps (Oct 08) -- Definitely derivatives (other usage) ought to be wrapped with some type of testing constraint. Minsky's notion of speculation leading to ponzi applies here.
• Swarm proof (Sep 08) -- This type of proof, applying the wisdom of the crowd concept, would be interesting in several contexts.
• The times (Sep 08) -- We need to accept our quasi-empirical limits as we apply some notion of testing. How do we agree on these is something to discuss.
• Loops and truth (Feb 08) -- Getting an agreement on limits would help us to try to resolve issues related to the thrill of gaming where consequences go far beyond the player's own health and wealth.

• Cult of me (Jul 09) -- We may already have some sandboxes that are being misused by the 300 lb bullies.
• New type of colonialism (Sep 08) -- Sandboxes could help reduce the large influxes to some pockets, albeit that some of these come about from making bets that pay off (note, near zero allows us to know that the pay off was from pockets that diminish correspondingly).
• Oops as poop (Sep 08) -- Not handling moral hazards leads to an increase in sandboxy ways (where the whole economy is seen as someone's sandbox).
• Oops and more oops (Sep 08) -- We could show that hedging and speculation are natural control mechanisms to some point beyond which the game then is sandboxy and ought to be handled as such.
• Miscellany (Jul 08) -- The sandbox notion applies to control of risky behavior, except that there has not appeared to be an easy way to resolve the issues. However, has any tried the sandbox? Oh yes! Engineering!
• People matters (Mar 08) -- This was the first mention of the sandbox needed to control use of methods that have more potential than their current role of moving monies into a few pockets. After all, how people use their monies can be a type of voting. Allowing such a thing to evolve can be thwarted by the massive flows from the giants (un-level field).

Note: these posts paralleled the unfolding of the madness with several reactions, including from incredulity.

Note: 'sandbox' has found usage in computer security and software development. This usage is apropos to the discussion of an economic sandbox.

Remarks:

01/15/2015 -- This week, this post is getting read. Great! Nice little piece of work (kidding, in part) so many years ago. ... At last, a series that will establish the basis and extensions, as required. We are going to go back to some simple and come forward to the modern, complicated economy. Why? My long chain of ancestors (inherited via Prof. Lucio Arteaga) is one motivation.

12/22/2014 -- Nice to see the WSJ article use "sandboxed" in relation to the absence of "predict or control" within the context of computation (in a sense, we are already out of control). The issues raised in the article are central to truth engineering's core focus.

10/30/2014 -- Where are we?

10/16/2014 -- Need to get back to this, as the days of the downturn loom. No matter how much the Fed feeds the panhandlers, they will succumb to health issues at some point (when?, how long?, actually, for me, it does not matter, as I am an observer, only, who is one of those interested in building a better pie). The tragedy to all of this? Oodles of hapless folk will be drawn down with the players as their ca-pital-sino sinks. ... Does not have to be. There are better ways.

01/20/2013 -- Perhaps, the sandbox ought to be for play, dirty and otherwise. Which means, of course, outside of the mainstreams that handles things for the folks who care about their economic well-being.

09/14/2012 -- Ben just gave them, the runner amok'ers, the store. 

05/28/2011 -- Lemons problem, dark pools, ... Oh, so much to look at! Avatars, too.

04/03/2011 -- Need to look at some background issues. Sandbox, again.

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

01/27/2011 -- The chimera shines.

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

12/24/2009 -- What would Samuelson think of the concept?

11/29/2009 -- Rick is now with the SEC. Who will engineer (verb)?

10/05/2009 -- Ah, yes, on the behalf of.

09/13/2009 -- Need to pause for a bit, to look at Bookstaber's work.

Modified: 01/15/2015

Economics and Medicine

Moral: Wherein we remind ourselves that though finance and engineering are two important aspects of the economy, there are others. For instance, even though we can include science under engineering, it ought to stand on its own. So, we can start with medical science.

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The recent Atlantic provided an analysis of the current status of health care. One article by David Goldhill (How American Health Care Killed My Father) looks at the evolution of the past couple of decades. An interesting notion is the emphasis on insurance in which the patient is not treated like a consumer who is spending money and incurring a cost that can be controlled. Not, the whole thing is oriented toward the games of the providers and the bureaucrats. We need to get the patient back into the focal point. Of course, not everyone could be their own advocate in the proposed system, but that it is being discussed is encouraging.

Regina Herzlinger has been arguing for a consumer-driven health-care systems for some time (Who Killed Health Care?) and is referenced in the Atlantic article. The approach that Regina proposes would rely upon evidence based medicine to provide a basis for making decisions, along with a better medical IT situation.

As a reminder, any new approach, especially that related to computing, would be plagued with the same undecidability issues discussed with finance and engineering computing. Yet, it makes sense in that one reason that capitalism works is its bottom-up nature, when we stay away from errant states, such as casino capitalism. The top-down, planning economies have a worse time handling the undecidable issues.

As well, Regina argues for use of the HSA with some subsidies. As described in a scenario by David, we already have paid a lot (see $1.77M example) given the current situation.

Continuing with the medical focus, we can apply some practical use of metaphors. Even though, the Atlantic article, mentioned above, references a study showing how just a simple check list can improve procedure quality and reduce infections, what medicine shows us, though, is that protocol cannot trump the doctor's knowledge and skill. There's a balance that needs to be better understood.

The same is true for the economy. In fact, there are many parallels since people are the main theme. But, the main motivation is not filling pockets. We need applied use of science and data about more than who has succeeded in getting rich.

Of course, having said that, the question of the overarching metaphor for the economy is still open and to be discussed further.

Remarks:

01/03/2010 -- Sometimes, it seems like a bait and switch.

09/09/09 -- We'll need to look at UUUN, as a framework.

Modified: 01/03/2010

False positives

Moral: Wherein we consider more background, such as some 'problems' related to economics.

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While looking at EconoSpeak, I found a post with 'Economics is not a Real Science' (09/23/11) in its title. The theme of the post refers to the recently obtained data that might suggest that changes may be needed to Einstein's view.

That is, if the data turn out to be correct. A whole lot of analysis is needed to remove any doubt of measurement error.

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There was a remark that many didn't want their names associated with the findings, just in case there were errors found. Evidently, avoiding such a stain means more in that scientific world than it does in the dismal one of economics.

That is, just as we've claimed that changes are pushed out (like some of the recent Big Ben moves) without any framework for seeing how it works. The 'cowboy' mode is used in some circles to describe this sort of thing.

Dorman uses the concept of types related to hypothesis testing. In fact, he points back to an earlier post: Annals of Unscientific Economics (04/05/11).

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Before proceeding, comments to these two posts bring in a couple of blogs that are of interest.

• Maison Fluery -- makes the very correct relation of economical thinking with systems analysis which then can be used to show that the monetary system is unstable. Is that arguing against fiat money? Of course, it's nice to see Minsky (7oops7, Truth engineering) brought into the argument. (see Comment at the 9/23 post)
• Very Deep Left -- on the dogmas of economics. (see Comment at the 4/5 post)

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Science must (can afford to) be consistent, since it cannot be complete. Even with all of its effort, you can expect to find problematic findings. Why? There is no science that is not filtered through the human experience.

On the other hand, can economics get away from the human frailties? Perhaps, if it dampened those who perturb at the top (firming up the basis might help here). Bottom up? Yes, all sorts of initiatives, such as neuro-economics, need to be pursued.

Too, though, effort ought to be put into a 'sandbox' with which to maintain a little more stability.

How? Well, that's why we're here.

Remarks

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)?

09/27/2011 -- Science cannot be complete, therefore it can spend its time (and energy - enormous requirements) on being consistent (or, more formally, sound). Yet, we cannot wait for science in our daily lives; nor, can we entirely run ourselves on this limiting (yes) viewpoint.

Engineering (as one of the application frameworks) uses much more than 'science' in its achievements.

Economics is different from (some) science , as it deals with people and their lives. The reality is that Economics uses types of compactification as the basis for arbitrary (some better founded than others) closures that then are, or are not, operationally effective. Our problem is that this creative effort can be stable, if done in a mature manner; yet, it is mostly pirated (and made unstable) by those who take advantage of situational opportunities (because they can or are allowed to; or, because we are all idiots in their view).

A good example of the situational is what is called the 'quants' (original post) phenomenon. Supposedly done by the best-and-brightest, this type of activity essentially exploits differences (as in, that which is behind volatility) in a manner that is not unlike siphoning off the cream. The net effect (near zero) is an almost guaranteed impoverishment of the many whose health and welfare serves as the source. The sink? Of course, the pockets of the fat cats and their players.

People, these types have 'played' with us, humanity, forever. It is time to grow up and let them know that we are more than mere commodities (kleenex metaphor applies) for their use and exploitation.

How to do this? Again, that's why we're here.

Modified: 09/29/2011

Public service

Moral: Wherein we start to look at Dick's book, he the friend of Big Ben's predecessor.

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Who is Dick? Cheney, of course. Why is he of importance? Some think that he is at the core of all types of faults that triggered in the past few years, including those of an economic flavor.

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Of course, Dick was not an economist; he was in the position of influence on a lot of decisions.

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The book did give the blogger a different view of Dick. From the press' print of the past decade or so, the 'dark side' seemed to be the most prominent thing. That made Dick the focal for those who have angst about all sorts of thing, both political and economical. Of course, he seems to like to reinforce that sort of thing, as some claim when reviewing the book.

For one, he is not of the 'prep' crowd that subsumes most of the seats in the best-and-brightest collection (some of whom showed themselves to be idiots). Yet, he's a member (but, not by birth). He talks about getting booted out of Yale; then, he went out and lived with the lowly working type until he started his educational efforts again. What 'preppie' type could do that? The blogger, on the other hand, studied the alternative reality that surrounds us all.

Too, he is about the same age as the blogger, yet the his path and the blogger's path were quite divergent within the same milieu. Of course, his focus was politics and power; the blogger's focus was economics with a mathematical bent that tends to attempt resolution of 'truth' and its necessary maintenance. Yes, the blogger's work has been in computational models; why else the blogger's stance on how bad these have turned (and will continue to turn) out to be?

---

Aside: the top-down and bottom-up resolve their issues through the middle-out (conceptualization to be updated), in a sense. That is, if power lets truth come to the fore. Does the top-down need to be the political mess that it is now with the disparate partisan views? We'll have to look at that when considering issues of economics. At the lower levels that support the bottom-up, what does 'politics' mean anyway? From that view, the imperatives are more important. It is nice that Dick's book will allow a re-look at this type of thing.

---

Dick mentions the time when he heard President Kennedy talk about public service. I, of course, have had both military and civil service experiences in the support of this country. Too, I've worked, as did Dick, in the business world (including an international scope). He, of course, was of the CEO MVP type; the blogger was more of the technical type who work to make things better all around, including advances in systems, and product, engineering.

---

Aside: engineering has given us marvels. What has politics wrought? Too, the current jobs problem brings to fore another unfolding. Many went from engineering to finance (the blogger has even heard of a MD going from practice of medicine to financial gaming). Then, their 'train' wrecked (despite the fairy dusting). Such could have been (was) foreseen. Now, if the cadre of youth goes into politics? Perish the thought.

---

As the blogger has said before, finance is in trouble since it is not considered to be a realm of public service. Nope. It's a trough for the fat cats (pigs, actually) to gorge themselves. It ought to be run by those who take a vow of simple living, plus who do not salivate when a buck is passed beneath their nose (yeah, Dick knows all about this trait).

Think the core of the military (no, not the star officers); even thinking of monks would not be too far off the mark. This is not strange, people. It is the only way to keep the arses from screwing up things.

---

As the blogger has said before, all Americans need to do public service. Yes, even the preppies. And, we need to have it like the barracks experience of old. All classes, and types, together in an environment where they live and work together.

That would help remove the egos who now run things. Too, it would allow people to attempt to resolve their preconceptions, and such, about those of the unknown classes.

---

The blogger's reading of Dick's book allowed the blogger, somewhat, to see beyond his 'dark' facade. He is more shallow than the blogger had feared. Dick, if you want to understand the American phenomenon (as it has unfolded in the past 50 (and 400) years) from a deeper sense, come talk to the blogger. Yes. Of course, you'll have to perturb your political worldview, somewhat.

---

The turmoil, and those who want such, that Dick sees all about is not a wrong perception. But, it is no more than the natural state of pecking order. Did he really think that he raised the perception (in the several senses) of the U.S. through his thoughts and actions?

---

To be continued.

Remarks

07/06/2012 -- Today, we have the one-year remembrance of George Edward Kimball III (GEK III). 


05/11/2012 -- This week almost got by me. Let's hear it for the government worker.

05/10/2012 -- At least Jamie admitted that his bank lost two-thousand million in a few weeks time. 

01/16/2012 -- Ah, Jamie did an "ah shucks" interview. How can one demonize him and his industry? Yes, he even talks OWS without barfing. Is he after Timmy's job?

12/16/2011 -- Those in power need their carvers. See Remarks 12/16/2011, Hitchens (the recently departed) undergoing a waterboarding experience.

11/30/2011 -- Need to respect the bottom up. Will the computer finally let that come about?

10/17/2011 -- The king maker ought to awaken to its errors.

10/09/2011 -- Kings have sovereignty over their dominion however large it may be. There, currently, is no king of the world of this type. CEOs have sovereignty over their companies. Now, many of these have domains that are larger (measured many ways) than geographical types of kingdoms. BUT, each has sovereignty over themselves (or ought to), ideally (constitutionally, if you're in the U.S.A.).

Now, being able to exhibit sovereignty requires talent of various sorts. Throughout history, those who ruled others may or may not have had this talent. From all of the turmoil over the millenia, one has to just marvel at the stupidity of these types, exhibited, in the modern age, by the CEO MVPs.

Our task is to foster that which enhances one's self-sovereignty and diminishes others' influence on oneself. Oh wait. The social media seem to be antithetical to this notion. Also, all of those issues related to mature interactions (of a peaceful manner) must be resolved (philosophers have long been involved with that dilemma).

It is this type of notions that are behind a lot of what motivates the current protests. Those who could (LT 1%) have exploited (and have been allowed to exploit) the rest (GT 99%).

09/27/2011 -- Some like to polarize thought and opinion; to boot, that means that other humans are demonized. So, for some reason, Dick took it upon himself to play such a role on that right part of the spectrum. Oh, it's a spectrum? Now, something that we'll have to look at closely as we unfold the real basis are conflicts of a nature that are 1200 years old (look at Charles the hammer, for instance -- look, that's 700 A.D. -- we're having the same conflict -- sheesh). Some have awakened to the idiocy; others are still under the influence of those in power who like to perpetuate the misinformation. Now, is Dick one of those? When Dick and the blogger were younger, the badie types were 'communist' and out to get us. Since Reagan, some seem to think that the conflict there is over. Don't count on it (if we look at the characteristics involved, we'll see many analogs). These social issues pertain to economics? Of course. To whom can one go to see some coherent philosophy, and history, of the economical as it relates to the human experience (which is?)?

Modified: 07/06/2012

The chimera attracts a lot of attention

Moral: Wherein we look around at all of the viewpoints (as in, Janet's is only one of many).

First, a disclosure. There was the beginning of a re-look at finance/economics six years ago from two viewpoints (pointer to the first post on finance, both September, 2007): truth engineering, 7oops7.

• The first blog has a more general theme which will be of more interest as things unwind (that is, when Janet deigns to let things take a "natural" course - she cannot keep her finger in the hole in the dike forever). As mentioned in that first blog (2007), things looked zero-sum at the time (even with all those talking win-win; too, remember all of those who said that we had "risk" trumped?). As time went on, near-zero became into focus (and will be explained further). As well, the whole gaming aspect makes one think of finance as basically a playground for the few (diaper'd set, for the most part, who we had to clean up after - idiots, and we'll go on about this). 
• The second blog started with a focus on engineering issues. One hard problem is earned value. Essentially, that deals with knowing how well progress measures are showing real status. Okay? Just like accountants can cook the books, project people play with these types of numbers (or, let's say, have been known to; however, saying that glosses over a whole lot of issues). But, it became apparent, about this time, that the brains of finance had led us astray - what? again? Remember, my advanced academic work was done in mathematical economics, for the most part. But, I worked, during my career, with engineering problems. When I woke up to the fact of the dire straits (not personal), old Rip came to mind. WTF? And, look, brains, I still am asking that? ... So, you see, evaluations (establishing value - needs to be updated) are more commonly necessary than one might realize. That is, operationally, we need to do this. What has happened, though, is that a whole lot of this type of stuff is being applied mindlessly (sheesh, talk about a real need for mindfulness).  

---

Today I ran across some writings by Doug Short (searching on evaluations). He started his blog in 2005 and found success: dShort Updates. Too, he has a data focus (with lots of nice charts). Too, he and I have some parallels, though I may be a little older. I like that he is autodidact in economics (there is a lot to discuss here). Actually, in any field, one has to follow one's own lead if venturing outside of the mainstream.

So, Doug is on the reference list that I need to build (early collection of blogs and miscellany). There will be more viewpoints added to the list.

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Aside: Look at my academic and career background. Note, please, Data-Driven Purgatory has a lot behind it. Of course, it is my responsibility to support and to argue for the position. But, for beginners, consider, please quasi-empirical imperatives (trutheng, 7oops7). Despite large numbers (and their gifts), we are being over-layed insidiously with pseudo-truths abetted via computation and its mathematical associates and ought to be quaking in our boots. Even the IEEE wrote about having jobs in big-daddy data (essentially, machine learning and statistical testing). Forget ISIS (they, at least, are true to their word). This is much worse since it poses with such a nice demeanor while plotting our demise (not physical, as ISIS would have; no, intellectual and spiritual death - much, much worse.

Remarks:  Modified: 02/11/2015

01/15/2015 -- At last, a series that will establish the basis and extensions, as required. We are going to go back to some simple and come forward to the modern, complicated economy. Why? My long chain of ancestors (inherited via Prof. Lucio Arteaga) is one motivation.

02/11/2015 -- Wikipedia: Zero interest rate policy.

Investors I

Moral: Wherein we slip in a look at investors before taking on additions to Financial Engineering I.

Aside: Still can't get over the temerity behind naming the discipline "engineering" when it deals with chimeras, a lot (money, as an illusion). Too, we'll be back to explaining chimera further.

So, what is an investor? Well, one who invests. Now, before going further, let's talk a little motivation. Everyday, business day, that is, there are talking heads, and charts and graphs (in fancy colors and fonts) galore, hyping what is seen as the core of busyness (or the economy, even). And, they're always talking that the investors did this or did that.

Now, if you put these peoples' feet to the fire, they could not pinpoint an investor by definition. They would probably punt to Investopedia (nice little site). Or, waffle while trying to find some expert (read, consultant) to answer the question.

But, really, who are investors and why do we care about those who are inflating the DOW (actually, Ben's little, actually big, largess is a major factor)?

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Actually, there is another motivation. Yesterday, I ran across this little bit on the DOW 36,000 thinking. You see, twice within recent memory of most beyond 25 years of age have been events where mania looked upward to the sky while the ground beneath those ones was falling. Evidently, their senses were out of whack, as some denied the fall until they hit (including our wonderful guy, Ben).

But, there is a little different tone to this article. The thing is that the returns that are expected (something that investors desire, namely some gain) requires, over the long haul, that the DOW inflate grandly. We'll get back to that, as gains can be ill-begotten (note, please, that this is three-years old and will be updated), are beyond the normal view (say, you investing in your kids' future - note, please, did not say "for" - rather this is a "being" issue - hint, more than just being a parent, okay?), and more.

Aside:  Gain from others lining up with their money (Ponzi, or Made-off, comes to mind)? You know, this paper-gain hysteria is as non-being as one could get. Of course, some get rich (some; most cannot - thinking that everyone gains is delusional). Folks, let's get the discussion back to real gains and the necessity thereof.

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Actually, Wikipedia does a nice little job; their article lists some types of investors. However, their list is not complete: where is the labor of the farmer? the daily upkeep of a child? ... Those are not investments? Why not? ... Hey, what about shoring up infrastructure (we have let this slide far too long - by using the Harvard- driven, short-term view that glorifies the idiots with high IQs (yes, savants, in a real sense) who have no morals and rape the world and all of us for their pleasure (want me to name some names?)?

---

It's probably fortunate that MIT took the financial engineering route as that view can help balance out the misshaped views that resulted from the indoctrination fostered by their Cambridge mates. You could say that the quants provided by MIT (yes, those who run the technology that allows the giant sucking daily) enable, via these platforms, the grandiosity of the worldviews that rape and take (as in, auto engineers versus drivers). Yes, building market systems is part of computational finance which is one of the aspects of financial engineering.

Aside: Some things to look at thoroughly are those that lead to (or reinforce the notion of) the ca-pital-sino. High-frequency trading has some much stench attached to it that I can smell it from where I am now, long way from the markets. The whole idea of what might be called fishing is atrocious. Silly, really. What is that? Essentially, fictitious (ah, Karl would love that) trades to test the waters (rather, to lure dumb asses into a position of losing their shirts, okay?). Futures, anyone? Part of the problem accelerated when these were enabled with advanced computing. Just because they can is no reason to let loose things like this. That is, futures, themselves, are not a bad idea. It's the morphed processing (and worldviews) that are troublesome. But, market ideology, and big money, make a good case (actually, snow job); why else are they allowed such shenanigans (greasing politicos' palms?)?  

Allah                                        Moolah

One missing aspect, though I saw it mentioned in one MIT article, is what gets labelled "ethics" (but, is actually much more); a closer tie between Harvard Divinity and Business might be an interesting notion to discuss.

---

The MIT site had a couple of articles with nice leanings: curing cancer support, large-scale biomedical funding. These discuss how innovative means could improve on-going fiscal concerns. That type of thing is what we really want to see.

As opposed to what? Say, consider the mere gaming thrust supported by the current markets. The current bubbles (there even if Ben cannot see them) are of this type. We can't blame the guy; where is the sound worldview that ought to have a solid research basis and lead to stability (away from the perdition-laden path that seems to be so normal)?

---

Investopedia's look stresses capital and trading thereof. One would expect that. Wikipedia has more variety. For instance, they mention sweat equity which would cover the above farmer (say, small, private owner-operator). So, investing is what we all do when we get out of the bed each morning. Those who look ahead invest prior to retiring for the day. Lives well spent invest and enjoy results during the whole span.

Then, we get all sorts of examples. Most recent? Detroit? Prior to that, companies that rooked workers out of their pensions (no repercussion to the business - brief headline flash, then it's forgotten; except, those who lost their future -- actually, Ben has slapped savers silly and wants to continue to do so).

One expectation from wise investment would be future payout. As well, no one raking off the top is another. Yet, these issues are buried beneath the hyperbola related to the daily show (S&P 1700, for instance).

We'll get back to FE. How could it be used to establish a better notion of investor and risk management (remember how there could not be another downturn -- about six years ago -- according to the experts?)? These are not rhetorical questions; rather, the urgency needs to be lifted to awareness (daily and more).

Remarks:

08/15/2013 -- Nice viewpoint. Farce, indeed (chimera).

08/13/2013 -- Yesterday, we mentioned that President Obama wants to change the mortgage arena.This seems like a good opportunity to start a look back. One would hope that those who are in charge of the changes know the intricacies of why we have idiots running things now. If not, we'll attempt such an analysis here. Idiots? Yes, such inconsistencies of tying up money for 30 years, at a low interest (without acknowledging that taxpayers allowed this to occur in the first place, early on for veterans coming back from WWII). There are others things like this that seem so like chasing after the perpetual-motion machine. Finance, built upon bogus money, has no way to ground itself, essentially. So, let's start with Investors II.

08/12/2013 -- The President of the US is talking about changing the mortgage game. For one, Fannie and Freddie would change dramatically. The WSJ reported that these ones are making oodles of money (if so, it's due to Ben's free money). We'll have to weigh in here, at our speed, of course. For one, we'll lay out the progression that got us to use of the CDO in the mortgage context. Fancy, creative finance is what drove these things. Too, we'll consider what ought things look like (look, there have been many changes for the past 100 years or so; a look at these issues from a temporally unbiased manner is imperative.

08/08/2013 -- Obama is talking inconsistency (but, perhaps, Emerson applies). He cannot have 30 year mortgages, with low interest, and expect there to be loads of housing. Fannie and Freddie had a purpose (by the way, Obama ought to have someone explain to him that these two were right there with the phony finance - yes, they were heavy players in the structured game -- and, some of their people made oodles -- oh, perhaps not to the level of private equity -- yet, F&F, with a proper bit of ethics and such, would be the way to go). They did not have to become pushers to the addicts (see prior parens). I guess the suited thing (dealing with the Wall Street types rubbed off). We need more practical minds that will withstand the sirens (the WSJ has it wrong -- it's not the sell-off siren that is the problem; it's the one that leads to greed and perdition -- those of the expensive suits are not heroes -- never have been). ... What really needs to be looked at is the morphing to gaming of all of these markets (it's a shame -- no where to go to really have a capitalistic experience -- was there ever? or is it that Adam had a fantasy?).

08/08/2013 -- We'll be doing another Investor post (probably a series). This one had a limited view, mainly equities. Let's forget the DOW (and its ilk, which are stacked games in place to fleece investors) and look at where the money is (private equity, hedge funds, etc.). Take private equity. The WSJ recently reported that many of these are pushing out bonds (another post needs to look at this option) for the sole purpose of paying themselves, and their like, huge dividends. Mind you. By doing this, they're loading their companies with debt. Guess who pays? You see, these bonds are supposed to pay huge interest (7.5%). Of course, with the big guys taking their cut (an analyst of a large fund says that this is like taking a huge home equity loan and going on vacation - recall, if you would, that we saw this with some home owners prior to the downturn -- then, some of these owners just walked away from their debt), the workers will have to make up to pay interest (recall, Hawker, which came from Raytheon's push out of Beech (highly indebted); Hawker could not service their huge debt, went bankrupt, thousands out of work, ...). Now, those buying the bonds know that the ratings are low, the risks are high, but Ben set this stage. The bond buyers may lose their money; but, they can also hope for an IPO that would bail them out (in this inflated market?). Recall, Spr, too. Same players as with Hawker, They got a partial IPO, yet those who bought were under water for a long time (some still are). Long time means years. ... You see, finance is creative when it ought to be utilitarian, many times. Ben is playing a losing game; but, he knew that (the siren's lure - face blasted everywhere -  must have been too strong; King Alan morphed to Bennie -- poor guy).

08/07/2013 -- Investors? After the last taper talk (more than a month ago), things jiggled a bit. Some lost money. Some gnashed their teeth (but, for someone, like my ilk, who has been slapped silly for several years now, what comfort ought we give to those who don't know how to wean themselves from their addiction? --- in the meantime, Ben, we, the savers (saviors?), continue to be good citizens despite the Fed's attempt to trample us under the dirt). At that time, Ben had his Doves talk goo-goo. So, the mania began again. Yesterday, there was a slight downturn supposedly as some Hawk (or two) said, perhaps, next month there might be some fiddling with the taper (the talk wasn't that the investor would get reamed - forgive me, I was in the U.S.Army at 17 and learned some good lessons -- also, I was a medic so I know of orifices, to boot). Ben's problem is that he's in a fog (who isn't?). Yet, he runs around with the elite like an oracle (he ought to consider some of the Prophets about which he knows, perhaps), strokes the addicts, bends in to the money'd, and more. And, he looks for signs (omen analyzer -- ah, age-old behavior). And, he misses the obvious. For instance, what they're calling jobs (related to his triggers) are really just glorified indentured servancy roles. In fact, these things are to drive a consumer-oriented economy? ...

08/05/2013 -- The comment at the Motley Fool (by the way, congrats on your anniversary) noted that all couldn't sell out at the high mark. The corollary: some point (price) determines losers (in fact, the loser set is of larger cardinality in terms of membership), by necessity. In fact, the way the game is run now (assisted by financial engineering), the markets will die. ... Now, there is a way that all could sell out at a price. Government, meaning taxpayers, as buyer of last resort. To whom would the government sell? Well, what Ben has been doing is a type of last-resort buyer. Of course, he's working in the bond area, yet the money that he is freeing up has to go somewhere. It's not going into creating an economy, with good jobs, that we need for the future. Actually, he's been quoted as wanting people to go after risk. Right now, that games seems to lead to the equity side of things. Hence, we see a big bubble. What is the real basis upon which this bubble (multiply faceted) is building?

08/03/2013 -- The Motley Fool asks how high can the DOW go. The comment from Nitty Gritty Truth is mine.

08/03/2013 -- Forgot to point to (or use) the early notion of doers vs speculators. All sorts of things are awry with respect to this problem. For one, even having those who have never performed a particular driving those who do have to perform through models and other computational assists (classic split of white/blue). Boeing merged all sorts into teams; think of them as design-build, in focus. There can be this idiocy where the white side makes decisions about what the colored (blue) side is doing. Design example? Having something in the plans that is not realizable (do not laugh; this can be a major problem). For another, we see that the capital/labor split allow those who held the former to exploit the latter (continues to be assumed as proper). Actually, labor is capital in the sense of the one providing the labor. So, that capital needs its rewards, to boot (what I find funny is how these upper crusts talk about their efforts and how hard they work; crap, with capitals; let me take those arses down to real jobs (the blogger has had oodles - far beyond normal - perhaps, I need to document the variety) and put them through the paces (now, I'm 70+, but I could still outwork some of those arses that I read about -- would have, easily, in my younger days). ... This is not complete; we'll do a post to bring the thinking up to date.

08/02/2013 -- The Atlantic had a recent opinion piece that deserves attention. Did that focus on fat-cat shareholders coincide with the drop in corporate liability (remember? when plane makers, for instance, got off the hook for accidental liability -- buyer beware, in other words?). If corporations are persons, how do they get jailed (put into solitary)? 40 lashes, anyone?

Modified: 08/15/2013

Hawks and Doves

Moral: Wherein we claim that we are not knocking Ben (and his ilk) and that we are interested in the future of economics.

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Or, we're interested in the economics of the future. More on that below. We'll add a new twist and look at Ben's ilk (well a subset defined by participation in the FED's bumbling ways). Why? He may be leaving; too, he has not been a lone player all along, though it's his face that we see when the FED has to talk to us, Congress, and the press.

You know, it's more of the last. But, what could the FED say to someone that it's torturing daily?

---

Right now, we have to report that the WSJ did an analysis which showed that the Doves were better at prediction (at least within this time frame) than the Hawks. The WSJ also talked to a few experts who made various observations. Let us add one: does self-fulfilling prophecy come to mind?

Aside: the image shows the table with results from the WSJ study.

Dove? Yes, those who coo-coo, while Ben goes goo-goo, after which the market'rs (more than addicts, ..., bordering on criminality) go gaga (again, apologies to the Lady). That is, those who don't want to taper (heck, they ought to unwind).

Hawk? Supposedly, someone who says to take off the training wheels (sheesh). These don't seem to have much say.

---

Now, about the future. Of course, predictions need to be done. Call them forecasts so as to bring in something a little more sane, weather prediction. By definition, these are look-aheads. Who has 20/20 foresight? Heck, we do not have 20/20 hindsight (all sorts of issues, such as our underdetermined basis). So, look-aheads would be based upon good methods, but they need to be updated, to boot.

You know what? The push to book cooking comes from a serious idiocy that has been allowed to manifest itself as smarts in the business world related to look aheads and meeting them (monthly dance of the CEO/Kings, the new royalty). And, we claim science and engineering as examples of our progress? Wait! I did use busyness, did I not? STEM has some applicability there; yet, busyness will need a whole lot more.

Aside: Remember about six years ago, thereabouts, when all we heard was that risk was solved and that would not be another downturn of a serious nature. Well, if you do not remember, we'll have to pull that idiocy to the fore in our argument for the necessity to be aware of singularities (to be defined further). The mess now is even worse than before things fell apart from thinking problems that are very much analogous (even related) to the risk fantasy (fair dusting, indeed).

Too, we need to re-look at money. Right now, it's some cosmic (comic) bit of crap that is managed by a set of wizards (recent books and articles discuss this whole issue). Yet, there are those who have reaped the rewards (raped the economy, at the same time). So, we can see what money can do. We cannot see all of the downsides (evidently, otherwise we would wake up and do right, yes?) for which the near-zero concept will be important.

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Ah, so much to look at. Thanks, WSJ, for the study.

Remarks:

07/25/2015 -- We're about six weeks after the June look back at 800 years ago (Magna Carta). Too, though, poster boys have popped out of the woodwork, including Zweig.

02/11/2015 -- Wikipedia: Zero interest rate policy.

09/17/2014 -- The coo-coo, goo-goo goes on. The landscape is strewn with the lifeless bodies of the savers. Thanks, Janet.

12/19/2013 -- Ben did his parting shot (whimper that it was); they're going to taper slowly, less than a 1/8th on the bond buy, starting next month. And, he's going to torture savers for another year or so. We'll have to see how the pieces fall. The markets got heavily seeded today in hopes of luring in the idiots and moms/pops (who cannot afford the pending losses). So, it's pop, fizz, ..., again. Too, we'll see more goo-goo talk to the immature markets and the addicted investors thereof. One of many technical issues that we'll have to get into: Nanex's view.

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?

09/18/2013 -- Pop, fizz, ... Ben had to show largess because of idiots who ran the economy to the ground (rogues all around). Ben is going. What do we have to look forward to? Businessweek has a review issue (of the past five years). Several articles are especially interesting. Too, phrasing shines: spin dross into gold (in relation to mortgage bonds). Perhaps, we'll get back to some of the more pertinent ones, at some point. If we do, it would be to bring forward what has been said here, from the beginning. To wit? Tranche and trash (WSJ has a good take on that). Securitization? This article brings on weeping (one example of the misuse of mathematics and computing that has been harped about). Adoption, and improved understanding, of lazy evaluation let loose the powers that resulted in the wild web and its little children, namely social media and more. To grasp the problem, we have to go back to computing that is in some type of responsible area. Avionics comes to mind. If what is couched as software in looser domains (financial engineering? -- looser?, yes bailouts are the norm despite all of the protestations of the ruling elite; or the whole cadre of the poorer folk can just suck it up when there are problems in order to relieve the fat cats' loss) were to used in flight controls, would we not have planes falling out of the sky? We'll get back to the simple issues that seem to not be seen by the elites chasing after the bucks that Ben has been throwing out of his helicopter.

08/21/2013 -- I was wrong. I thought that Ben would go goo-goo, again, as his doves want him to do. But, there is talk of a taper, albeit slowly. Sheesh. No one does "cold turkey" anymore? That's how I quit smoking. Why is it that the FED feeds addiction (that's a monetary policy?)? Now, when does the slapping the face silly quit?

08/15/2013 -- FED site, FEDofNY: Pre-FOMC Announcement "drift"

08/07/2013 -- Investors? After the last taper talk (more than a month ago), things jiggled a bit. Some lost money. Some gnashed their teeth (but, for someone, like my ilk, who has been slapped silly for several years now, what comfort ought we give to those who don't know how to wean themselves from their addiction? --- in the meantime, Ben, we, the savers (saviors?), continue to be good citizens despite the Fed's attempt to trample us under the dirt). At that time, Ben had his Doves talk goo-goo. So, the mania began again. Yesterday, there was a slight downturn supposedly as some Hawk (or two) said, perhaps, next month there might be some fiddling with the taper (the talk wasn't that the investor would get reamed - forgive me, I was in the U.S.Army at 17 and learned some good lessons -- also, I was a medic so I know of orifices, to boot). Ben's problem is that he's in a fog (who isn't?). Yet, he runs around with the elite like an oracle (he ought to consider some of the Prophets about which he knows, perhaps), strokes the addicts, bends in to the money'd, and more. And, he looks for signs (omen analyzer -- ah, age-old behavior). And, he misses the obvious. For instance, what they're calling jobs (related to his triggers) are really just glorified indentured servancy roles. In fact, these things are to drive a consumer-oriented economy? ...

08/05/2013 -- Let's see. Financial Engineering needs some attention. Perhaps, with the likes of MIT involved, this discipline can learn to lead the way out of the morass. Expect more on this topic. If things continue as they are, markets will be pure chimera (as in, ca-pital-sinos). Investors? We'll go on about that, too. It's guaranteed that most in the equity markets will lose. Why is that not talked about by those heads we see daily yakking on TV and newer media? No, they would rather go gaga (apologies to the Lady). So, we'll have to address this issue: the point (price) at which loss outweighs any gains to date. All cannot sell to make a profit. Now, there is a way that all could sell high (government as the buyer of last resort - Ben has been doing this, albeit with bonds - yet, it frees up money that can go to equities -- government? of course, taxpayers). We'll have to look at the misuse of mathematics; plus, doers need to be brought back to a respectful position.

07/31/2013 -- We'll have to address the take that Ben has applied to savers so that he could put it elsewhere (mainly, into the chimera of the ca-pital-sino). That is, make its magnitude known (very large). How can Ben sleep at night with the growling tummies of all of the savers whose dinner he gave away to the fat cats?

Modified: 07/25/2015