Financial engineering I

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

---

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.

---

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.

---

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), ...

---

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?

---

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.

—

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.

—

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

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)?

---

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.

---

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

Readings

Moral: Wherein we see that the current mess has generated many opinions which are interesting to read, such as WSJ, Economist, Forbes, and more.

---

The recent Business Week had several articles that we ought to look at. A couple of these will require further attention.

• -- Financial Innovation Under Fire covers three views about the needed regulation. Namely, the best-and-brightest need a leash to reign them in prior to bad consequences. The article characterizes as "beneficial ideas" and those that "are self-serving or dangerous" the types. Who knew beforehand? Or were we just to marvel at the creativity? One piece of news is that MIT has a Laboratory for Financial Engineering. Despite that opinions about financial engineering have already been offered, the blogger is willing to entertain the increasing role of computation. We do need what the virtual world offers and will look at this more thoroughly on a regular basis. After all, he spent his working life in advanced computing. Hence, he knows our main task, to prevent the wizards from their self-serving ways.
  
• -- In the future after the mess, what will be the consumer footprint? After all, we cannot expect people to live under a regime of increasing debt with no limits in size or extent, meaning, of course, that related to the rights of the progeny. Okay, some, like Fisher, see debt as an asset which it is. For instance, being able to borrow, that is, having a good credit rating, is important. That's not the same as debt on the balance sheet. The issue is that the consumer part of the economic equation is large. Some say 70% since $10 trillion of the $14 trillion of the US GDP is "personal consumption expenditures" according to Bus Week's Michael Mandel (Reconsidering Consumers' Impact On The U.S. Economy - Sep 28, 2009). However, splitting the number so as to isolate "out-of-pocket" spending, then the impact falls to 40%. Still large.
  
• -- There was an ad for Fisher's book, Smelling a Rat. He also has a website.This sounds like something that Whose Nose Knows will need to look at.

Note: Opinions range across the board. The new day will have influence on how the discussions unfold into action. Yet, one would think that there is some underlying 'truth' that would come to the fore. Except, where humans are involved, is it ever easy?

Remarks:

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

Modified: 12/24/2009

2009 until now

 Moral: Wherein we do a quick recap. 

This blog started in order in 2009 which was about when the last recession was over. The topic tells it all; we watched the Fed's reaction to the downturn. And, were posting in the 7'oops7 and Truth Engineering blogs. But, that was extraneous to those two topics. We needed something financial. 

Two motivations? One deals with MIT and their clever development of the concept of financial engineering. I ask them, engineers mostly. What science is behind this bit of shenanigans? Okay, 2009, that was the timeframe. Now, messes. Even the supposed financial bots are supposed to be smarter than MIT folks (well, perhaps we ought to start there; they never had claim to all of intelligence). Now, another motivation (there are several more, btw)? As the financial stuff unraveled, the Fed seemed to react in an old mode and then just capitulated to those who push the ca-pital-sino. Oh yes. As I said, in 2009, it'll be worse the next time. We have not seen this yet, but people who consider these matters worry.   

In the meantime, follow discussion at Quora. It has been at Quora where most of our attention has been given and most of our energies spent since 2015

Remarks: Modified: 03/23/2023

12/30/2022 --

On the behalf of

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

---

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

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

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

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

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

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

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

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

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

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

Remarks:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Modified: 05/11/2012

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.

---

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).

---

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).

---

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).

---

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).

---

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

Central Banks and Addiction

Moral: Wherein we let some particular events of the past week (irrational fear of the taper) motivate a few thoughts; too, Romain Hatchuel has a nice review in the 06/21/2013 WSJ that is worth attention.

---

First, what happened? Ben let up with his silly promises (so to speak); or, if we look at it correctly, Ben just talked the truth. What people read into it tells us a lot.

As said here before, the training wheels need to come off some time or another. Too, Ben and his ilk ought to consider savers who have been slapped silly for the past few years. Why? Ben, and his kind, have some type of debt infatuation. Gosh, PhDs, and other brains, are pushing this type of viewpoint?

Addicts would sell their mothers down the river. The whole thing of the past few years has been very much analogous to some type of unstable thinking related to overuse of substances (in this case, Ben's largess).

---

Aside: It's not Ben's fault, entirely (after all, the role of the pusher seems to be a consistent factor in human affairs -- so why not finance, too?); except, he seems to be trying to outdo King Alan as the chimera's main face (Ben, the wizard?).

---

So, as we've said before, let's go back to the basics, please. The whole regimen of Ben's pretty face out there with everyone trying to read something into his communications (verbal and non) is more than plain silly. It's stupid, folks. A proper view would demonstrate why this is so.

I know, how long will it take to get this defined? You see, the addicts want their daily fix. Some cannot live with just the five-day workweek. No, they have to use the other two days, as well, for their gaming.

Ever heard of a sandbox? This gaming type of mind would best be situated in such a thing. You know, sandboxes can be used by "children" for play. Too, though, consider how cats use sandboxes. Yes, those who need such could crap all they want. Then, they could clean up after themselves (unlike this past downturn where we had to clean up the crap from these people - diaper change, essentially).

The adults would run the financial community (Harvard, where are you on this matter? Or, are you in the class of trying to make the fast buck to the detriment of all but those in your class?) with the sandbox isolating the serious gaming minds. Would we learn anything from such play?

---

Now, finally, to Romain's article. He is a manager partner of Square Advisors, LLC that is based in New York. The firm deals with asset management. That focus implies his interest.

So, what did Romain write that struck a chord? Well, he writes, for one, that investors have been acting like "a bunch of junkies" using whatever "crack" is being pushed by financial markets. Behind all of this is the dealer with whom we are all familiar (who? Ben, of course). So, Ben just lets a glimmer out that he's limiting the supply, and those who are using his stuff go bananas.

Later, Romain goes into how addicts are drawn to their favorite substance and why. You have to love this little bit of analogy.

Now, after that, Romain compares the period of '50-'80 and from '80 to '10. You see, I am very much familiar with those eras as they correspond to my adult work life. And, from that perspective, I see that the financial world has gone bonkers. Look, since the downturn started, I've been looking to see where things have gone awry. It's simple, folks. As this blog has been trying to detail, albeit in a, probably too mocking, manner.

---

Aside: Academic work touched upon finance, from an economic perspective. Frankly, it didn't look interesting. Later, I heard that armies of youth were heading that way. Why? In retrospect, it was inevitable, given how technology evolved, that finance morphed. Too, though, the whole motivation for truth engineering has a lot in common with the embedded error-ful ways (we'll have to get back to this).

---

Romain's words resonate many ways, but we'll hold that for later. Let's just continue. You see, before '80, the debt to GDP ratio was small. Now, this is more than at the National level. You have to know that it deals with the personal debt, too. Romain says that in the 30-year period, to '80, the GDT grew 191% while debt grew only by 12%.

Now, after '80 (please, note, this is when the upturn of things like the DOW start -- sheer madness, when looked at properly, hint: near zero -- look it up in this blog, okay?), for the next 30 years, the GDP and the debt went up about the same.

Add caption

Aside: Ben, you might think that lowering the rate would help those in debt. But, many could not redo their loans. Note, too, guy, that many of the larger pockets got their debt forgiven (what? you're doing the 7-year thing that we saw in Leviticus? Actually, Romain, I would go further and say that rather than "junkies" which is pejorative, somewhat, what we have are immature ones who expect others to take care of them. There are several ways to characterize this, but "sugar daddy" comes to mind. That is, at some point, we seem to want someone else to pay. Where are the mature minds who will realize this? By the way, don't politicos always have their hands out - like takers?

Aside: Despite these immature takers, we do have those who give. Take the enlisted class in the military who give their all without sufficient reward. Not talking the O-class, who consider themselves, by the Grace of God (I suppose), as better. We, as a nation, have asked for supreme sacrifices from the few over the time periods mentioned in this post. At the same time, we've spawned many big pocketeers who never performed in any type of national service. ... There are many other types of givers. Actually, the whole economy rests upon those many (even though most of the attention is given to the fat-cat errants - the times) who have been striving despite difficulties to perform roles of substance. ... By the way, did you hear about Goodwill managers making 100Ks of bucks while paying some workers cents (yes, cents -- by the way, I was paid, in the 1959 timeframe, less than a dollar an hour for performing the duties of a hospital orderly - my senior year in high school - that was 1/2 a century ago -- this is 2013!) per hour?

---

Yes, debt is borrowing from the future (Romain sees this as do a lot of others). ... Too, the whole talk of liquidity is a game being played (and they're using phony mathematics as the basis for the argument) out by those who want to take the cream off the top -- ill-begotten gains, for one).

Look, some one trolling to find suckers is not adding to market value. Consider, do we let the legal authorities entrap? Yet, we let the financial idiots to this as if they're great brains. Gosh, folks, how did this madness come to be? Financial schools (yes, academia) need to step up as some type of authority. Oh, Ben is from such? What was his problem (besides trying to control a gigantic system with incorrect knobs)?

Romain quotes Krugman on austerity (see Wiki for a good discussion). Of course, Krugman stresses liquidity's usefulness (which we can show is mainly used by insiders to tweak the system in order to enhance their gain potential). Does Krugman consider that we've hocked our progeny's future?

---

The debate will continue. Romain seems to rue opportunity lost.

Well, reading the article got me to thinking about the times of six years ago (see 7oops7, when the first glimmers of idiocy stated to peek around all attempts to keep the public in an unaware mode). When things started to tumble, there was more discussion of things like moral hazards, and such. Of late, it's like the whole game is Ben and his largess and the resulting frothing of the markets.

What does it mean to a saver to have the DOW soaring when the banks slap you silly? Yes, they want you to get into equities, too (as in BofA trying to gain from taking over ML -- yes, nauseating, somewhat).

Aside: Tranche or not - This was the first post related to finance. You see, after the glimmers started, I got back to work trying to see what had happened in the financial world (I had worked in applied engineering - real products) that was so unstable. The whole notion behind tranching struck me as being like looking for perpetual motion (yes, indeed). Finance deals with the abstract and has become more divorced from reality through time. Most of the market activity daily is pure crap, meant mainly to churn and to generate fees. Why this became more problematic in the latter part of the 1900s is due to computation's ubiquitous-ness, in part.

Remarks:

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

12/05/2013 -- If only Ben would put a shot across the bow.

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

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.

07/12/2013 -- Will wonders never cease? Jon knocks early-lookers?

07/11/2013 -- Wherein we consider that Ben is entrapped by the expectations of the addicts. Too, this warps his view; except, he started to slap the savers early; now, he's torturing them (Guess what? Some nominee for a position admits that water boarding is torture. Ben has been doing worse than that to savers.).

06/27/2013 -- Plenty of talking has been done by several of Ben's buddies (of both genders). Now that the markets show that they have legs (or can, at least, stand?), perhaps, the thing would be to go cold turkey. Or, either quit the latest QE or raise the interest so that savers can start to heal their faces that have been slapped so many times that their skin is in worse shape than it would have been if they had undergone lashes across the face (yes, Ben, and his ilk, need to think of that part of the equation, too). With lashes, one knows when it (the ordeal) ends.

06/25/2013 -- Ben doesn't have to talk goo-goo. No, his hawks can do that. Today, the MN guy saying that they need to continue accommodation due to financial crises. Sheesh. Crises? When do they ever end? And, what about accommodating savers? Those who sold were the ones in early making "gains" almost beyond bound. It would be nice to have quiescence once to do an accounting (about as much a pipe dream - several reasons - as it is for someone on the Fed to argue for the little savers).

06/24/2013 -- The convulsions of DT continue. When, and how, can health be restored? Ben, do you think of that or do you just like to tip toe before the fat cats of Wall Street?

06/23/2013 -- As we expand the cosmology of business series, we'll get more into why mathematics and computation have led things astray (you'll hear it here, first).

06/22/2013 -- WSJ editorial: Central banks can't keep floating the world economy forever, and our view is the sooner the withdrawal begins the better. But as with all addictions, the withdrawal is going to be volatile.

Modified: 09/17/2014

Quants

Moral: Wherein we consider that Quants are several things. For instance, there are they who bring training in science and engineering into finance thereby raising the level of fairy dusting and elevating financial engineering (see IAFE).

---

Well, we are told, better handling of finance is possible through these means; however, consider that the non-profit approach might be of more importance than has been allowed.

IEEE Spectrum had an overview (The rise and fall of the quants) in the August, 2009 edition which describes the experiences of a few. It's interesting that some of them fell into the best-and-brightest role, namely a youngster who helps fat cats fill their pockets thereby earning outrageous amounts themselves.

Not that there is anything against making a living, or getting filthy rich (if done fairly and legally), yet the techniques related to the quants can (ought to) be heavily research flavored (The Physics of Money, What they need to learn, In his own words). And, guess what? Some win. Others lose. That's the way life is.

Yet, the influence on either side goes beyond those playing the game. Yes, these shenanigans leave ramifications. What? Yes, it's true.

Old Ben is too busy keeping things afloat to look at this. However, he cannot expect to have a stable economy without these influences being under control.

Merton suggests that perhaps only 2 out of 100 bright ideas pan out. Think of all those side-effects that come from applying tests, uncontrolled except for measurements oriented toward how big the pockets get, on the fly (see Wired's view).

Outrageous! Where the hell is the outrage or is everyone running after those dollars being thrown out by Ben, the pied-piper?

Why is this allowed? Some type of cultural blindness that relates to the economy and money? Somehow, the Lords prevail even though they monkey the works (Mother Jones' view).

Ah, yes, the pay consultant says that the high CEO pay (or any) is due to the small cardinality of the set of those who have the right qualities. Crap!

On a final note, mathematics' role will be covered here. Remember, though, that our success hinges upon economics becoming less 'dismal' as a science; yes, too, notions related to people not being understandable are suspect as they're an excuse for covering up pocket picking.

Remarks:

11/15/2015 -- Quora coming into the scene.

03/15/2015 -- Finally, getting around to the pending business.

03/03/2014 -- Acknowledgements, including math pedigree, will be expanded.

10/24/2012 -- Goldman skimming via Quants and their creative finance.

03/15/2012 -- Okay, might have used incomputability (see post on Alan M. Turing) but stand by the context, the issues, and the need for resolutions. Wake up, quants (you, too, Ben).

10/07/2010 -- Several principles need to be explored, such as the ergodic one.

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

09/01/2009 -- Oh, one might ask, why do I pick on Quants? A good question that we'll expand upon over time. They're like explorers in a new territory who mainly pillage and exploit when we, the human race, need more those who can map and help us learn. Learn as in real knowledge not just moving monies to certain pockets. Yes, indeed, a map-territory issue here among many others.

08/27/2009 -- Let's start talking computational issues and how they contribute to systemic risk.

08/24/2009 -- Further message to the Quants. Have you looked at the Vienna School's discussion of undecidable which applies, big time, to your milieu (even with the numeric overlay)?

08/21/2009 -- Need to start a list of technical things to discuss: ergodic hypothesis, sojourn time, ...

08/20/2009 -- Note 1: 'Derivative(s)' has been used a few times in the posts. The context may imply the usage, hopefully. But, in general, we're talking two types: 1) from finance, where 'derived from' is the proper interpretation (or as one may surmise from posts here and elsewhere, something from nothing), 2) the usual mathematical variety.

08/20/2009 -- So, Quants have their following, as evidenced by this 'hero' worshipping text from Wikipedia (hey, I'm a contributor and believe in what it foretells) that we find int the Slang Section: Rocket scientist, a financial consultant at the zenith of mathematical and computer programming skill. They are able to invent derivatives of frightening complexity and construct sophisticated pricing models. They generally handle the most advanced computing techniques adopted by the financial markets since the early 1980s. Typically, they are physicists and engineers by training; rocket scientists do not necessarily build rockets for a living.
Of course, that could have been written by a self-absorbed Quant. But, 'frightening' is the right word; yes, they may have been adapted, yet at what grief? At least, a real 'rocket' can be tested in a natural setting. These models? One purpose for our discussions here.

08/19/2009 -- I said earlier that, after some jawboning, I would get serious. Well, it's time. Why now (after all, I wrote that in October of 2008)? Well, hasn't the past year just been full of 'say what?' moments as things unthought of appeared without much clamor. Also, it's good to see the enthusiasm of those who have gone through MFE courses (yes, we do have to divert from the MBA mentality), plus the fact that blogsphere (like, Hail the Quants!) has allowed these students to share their thoughts is inspiring.

But, first, a couple of messages.

• To the non-Quants: not everyone has to run after the martingales, folks, in fact, the world needs those who can counter the quantitive bias. That is, we'll have computers. But, we'll also need to truth engineer these beasties, and those who are their keepers, using means that are analog and intutitive.
• To the Quants: if you take exception to this post, accept my apologies, but the intent is to riddle any who runs after money using insights provided by our mathematical talents. What we need is a collective approach to found the basis for the dismal science in a more positive approach (notice the absence of the 'istic'). Guess what? The framework will be computational with humans in the loop. So, there will be plenty work available for Quants.

Modified: 11/15/2015

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.

---

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.

---

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