Tuesday, December 30, 2008

Last post for 2008

Another year has passed with changes happening (probably more idiotic than not) far beyond what we thought last December.

In terms of finance, many knew that things were going downward. Yet, as failures occurred (Bear Stearns, et al), some kept thinking that we will go up from here. All the way to September, when we finally knew that the Wall Street (including the golden boys) of the casino capitalism, and of the huge payouts to their supposedly best and brightest, was no more. The bill that the taxpayer will end up with is still unknown (will it ever be figured?); the truth is that no claw-back has attempted to get back the 100s of millions paid out over the years to these smarties.

In terms of engineering, at the same time a year ago, we were waiting for 1st quarter reports and schedule changes to determine EIS for the 787. That timeframe changed a few times to the currently held view of 2010 as an appropriate (looking-forward) guess.

So, we had a couple of questions in works about finance before the side-bar of who might be to blame for the mess. And, we were going to ask some about engineering. As, there are parallels that are really strong (highly correlative relationship).

The thing about engineering is how to keep 'Murphy' away and, especially, to avoid the 'perfect storm' situation. Well, one thing might be to avoid hubris which ought to be easier for engineering than for finance. The former needs to test in the real world using certifiable measures; the latter mainly games and then privatizes profit and socializes loss as the means to get back into balance.

So, the questions on the engineering side would include things like determining earned value, how to know a contractor's status, what indicators would 'measure' leverage in outsourcing, when is computer modeling pushed too far (cannot proxy nature, except within limits), and much more. The seeds will be updated with some of these and, perhaps, will be rewritten in another format.

Remarks:

08/01/2013 -- Ben cannot unwind or taper downhe has too many Doves. We'll have to get back to the king thing (yes, the divine rights of the CEO, new royalty, in other words) and dampening of these types by a new outlook (Magna-Carta'ísh).

12/29/2012 -- Summary - 2012.

01/01/2011 -- We have four last posts of December under our belt.

05/18/2009 -- Testing in flight is within sight.

01/22/2009 -- Now a new day and way to consider these matters.

Modified: 08/01/2013

Wednesday, December 17, 2008

Who's to blame for the economy?

This question titles a USA Today (12/17/2008) editorial in which various culprits are identified and discussed. This blog did a little of that earlier, motivated by a WSJ op-ed. It is nice to see this type of analysis continuing as it will for some time, no doubt.

But, here is the USA Today list.
  • Investment bankers - one example is Fuld of Lehman Bros who took in $480M while helping to drive his bank, and the economy, into the ground. There are many others, see the list below beginning with Grasso.
  • Alan Greenspan - he spiked the bowl, plus his take on derivatives is very troublesome.
  • Rating agencies - yes, drank the "Kool-Aid" and led us to perdition.
  • Predatory lenders - the lack of oversight is abhorrent, yet how much of this was out and out malfeasance?
  • Clueless borrowers - the American dream in action.
  • Congress - allowed Freddie and Fannie to err big time and the big guys to pad their enormous pockets.
  • George W. Bush - ...
  • Bill Clinton - took away the Glass-Steagall Act, ...
  • Regulators - asleep at the wheel, in short.
One can easily add a few more to the list, such as Grasso, Weill, Bernanke, ..., which would be an interminable list, almost.

Too, how many made-offs are there yet to uncover?

Remarks:

04/01/2011 -- The last man wants the old days back.

11/04/2010 -- Big Ben is still putting us at risk and trashing the savers.

08/21/2010 -- Those at fault (we don't hear about this anymore), were they just claiming their 'royal' rights?

09/15/2009 -- Lessons, one year after Lehman. Also, Time on culprits.

09/09/2009 -- Alan's reign will be looked at, in time.

08/18/2009 -- As promised, FEDaerated is here.

08/17/2009 -- Books on the credit crunch. This crunch involved "macroeconomic imbalances, greedy and incompetent bankers, and fraudulent American homebuyers."

07/31/2009 -- Let's see, 5,000 got over $1M for services rendered. Well, that's probably a sign of being a best-and-brightest, at least to certain eyes; it's called rolling-in-the-dough.

Now, this can be used to illustrate how the game it to fill the pockets of a small set to an exorbitant amount. Does the game need to be that way? Hell no. We'll look at that some more.

03/25/2009 -- Rhetoric can be fun, but we have to get into these issues with depth and technicalities.

03/11/2009 -- We need to look at accounting's role messing up affairs.

01/17/2009 -- Lessons to be learned (as opposed to learnt) needs attention.

12/30/2008 -- Let's add to the list: hedge funds with the opaque nature that hides essential ponzi/madeoff characteristics (there is a return level that is only attained through suspicious means), administrators (such as those heading pension funds) who think that they need the hedge funds in order to get their returns (under estimates of assets the key problem - wanting something for nothing), anyone who thinks that money isn't moved from one pocket to another (okay, there are legit reasons for such movements - except the hapless continue to always get screwed - probably by definition), ...

12/18/2008 -- As well as people, we can list ideas that are bogus. But, any of these, such as leveraging, in and of itself, is not bad. But, fairy dusting is, by its nature, problematic.

Modified: 04/01/2011

Tuesday, December 16, 2008

A couple of questions

Actually, there are more than two questions.

Today, there was another shoe drop related to sacking the savers. Yep, the Fed put their rate to 0.25%. Just a year ago, it was over 5.0%. So, what is the person who has savings to do? Put it into the equities market (where securities are toxic by definition due to the gaming basis)? For what, to give it up.

Oh, we know. Consumer spending is a large part of the economy, of late. Must it be do? Let's talk about that and some other things. We know that spending, as non-saving, is necessary; but, need it enslave the populace, via unlimited debt, for the next few generations. Spending requires some type of basis; do we just give people the funds to spend? Oh, we just did that with the fat cat bankers, did we not?

Leveraging allowed many to balloon their pocket contents. For awhile, that is. It can only work for the populace, folks, in fairy dust land. But, an issue comes up; where can savings go to be safe from the idiots? We'll look at that.

Next up will be questions in regard to engineering.

Remarks:

01/03/2011 -- Ah yes, now there are demands. The question remains: what growth other than the pockets of these types?

09/26/2009 -- Lots of opinion and uncertainty.

08/20/2009 -- Consumers need income. Savers need other than to just be sacked.

12/18/2008 -- Leveraging, in and of itself, is not bad.

Modified: 01/03/2011

Monday, December 15, 2008

By necessity, Ponzi

We've seen it before; Minsky suggested it as so. Financial gaming is always ponzi-like with the inevitable suckers.

The question is how to control this. Well, there are several ways, but they require some toning down of the aura of money and related luxury. That is, are the richest the smartest?

Gains in equity are not 'real' profit, even though the government likes to tax these supposed gains. Or, it used to tax them more; lately, the tax takings have been reduced. No, the supposed gains in equity are nothing than more money coming into a game, not unlike what Madoff was doing, except it's a little more subtle and considered smart.

Is there not a major industry set up just to handle money going in and out of the equity market? And, is there not a whole lot of technology devoted to tracking this money and to allowing almost infinite gaming on slight differences (derivatives)? Yes, the whole industry is suspect from its very foundation.

But, 'real' profit determination would require putting money on something other than a gab standard, plus a few other things. That implies people doing things other than just moving around virtual bucks, such things as making food or being involved with other essentials.

So, to get it right will require some hard choices.

Remarks:

08/01/2013 -- Ben cannot unwind or taper downhe has too many Doves. We'll have to get back to the king thing (yes, the divine rights of the CEO, new royalty, in other words) and dampening of these types by a new outlook (Magna-Carta'ísh).

08/27/2009 -- Madoff exemplifies (albeit somewhat indirectly) systemic risk.

04/17/2009 -- Minsky and the facts of ephemeral value are a couple of topics on the list.

01/26/2009 -- We need to consider 'derivatives' in various connotations.

12/17/2008 -- We'll use made-off in lieu of ponzi, henceforth.

12/16/2008 -- Shoes continue to drop, but they are of several types.

Modified: 08/01/2013

Saturday, December 13, 2008

Crooked games

Well, it has been said here that there's not too fine of a line between finance and fiction. Usually, that was meant in the context of stupidity as manifested in leveraging or in computing idiocy.

Well, folks, there is a mathematical view that uses fiction in a serious manner. All of our views of life and things rest upon a perceptual and conceptual foundation. Whose nose really knows?

So, now we have this guy, on the Street for years, saying that he's pulled a ponzi. Now, his ponzi is not the hapless type that Minsky talked about: to wit, hedging leads to speculation leads to 'ponzi' almost by necessity.

No, the recent revelation showed a game that was out and out fraud (see "Is the Madoff Scandal the Story of the Year?"). Notice that many financial types thought that there was some sort of illicit stuff going on, yet they did not look into it or they invested (well, what are spoils for if not for the taking?).

So, we have to ask: how much of the market structure is now fraudulent or what other shoes will drop? Well, we asked before, but initiatives like SOX were supposed to help matters.

By the way, up close and personal, the blogger's friend, this year, showed a bank that their 'finger on the scale' calculations resulted in underpaying customers (this has been going on for a couple of years). The bank threw the blogger's friend out the door (Madoff threw out those who questioned his returns), granted with checks covering all his accounts but some of the instruments had not matured.

Appeal to the governments (state and national, oh yes, the OCC - see regulators in the USA Today list) showed that the regulatory agencies are essentially complicit with perpetrators, basically through not following up. Of course, they do have an excuse of having been decimated over the years. Too, the current administration carried on the theme of screwing the public so that the fat cats' pockets can balloon without bounds.

Finance, as a metaphor, is like the circulation system where it moves monetary value (the blood). Yet, we have allowed it in the western world to be the playground of those who cannot keep their fingers out of the pot.

Let's automate the thing and have oversight from everyone. Technology can allow this; truth engineering would be one facilitator of scrutiny. How else to remove the crooked games?

So, we'll have to list things: opaque wishes (like the hedge funds), elitism (as shown by Madoff's crowd of pushers), derivatives (using calculus to show the silliness), ...

Remarks:

05/17/2011 -- Hedge funds need some of our attention.

08/27/2009 -- Madoff exemplifies (albeit somewhat indirectly) systemic risk.

08/24/2009 -- Last year, Ben blinked and panicked. He frantically pulled out all stops as if with no thought for tomorrow. Now, he has no use for 'mea culpa' big daddy that he is. Ben, start to unwind now. The Vienna School's view that these things are undecidable (which is a computational issue) is right on.

04/17/2009 -- Minsky and the facts of ephemeral value are a couple of topics on the list.

03/11/2009 -- We also need to look at accounting's role messing up affairs.

01/26/2009 -- We need to ask, why finance?

12/17/2008 -- We'll use made-off in lieu of ponzi, henceforth.

12/16/2008 -- Shoes continue to drop, but they are of several types.

Modified: 05/17/2011

Saturday, December 6, 2008

Very big oops

One big problem is that the US has spawned several types of attitudes that do not bode well for itself or humanity. One operative question would deal with why which will be, in part, related to truth engineering. For starters, lets just keep adding to the list.
  • In the December, 2008 Atlantic, James Fallows interviews a Chinese banker who worked here in the US after college. The article is titled "Be Nice to the Countries That Lend You Money." Gao Xiqing, the banker, has it right about derivatives using the example of a mirror. And, to think that the best-and-brightest here have played a type of shell game thinking that the rest of the world consists of a bunch of idiots. Needless to say, Gao suggests that stopping this gaming would hurt, especially CBOE.
  • The December 5, 2008 WSJ has an article about Japan's use of 'temp' workers which is something that they learned from us ("Japan's Recession Hits 'Temps'"). There is a lost generation, essentially, who never got any economic traction.
Remarks:

12/18/2008 -- We can identify players, games, etc.

Modified: 12/18/2008

Friday, December 5, 2008

Sides of the story

Earlier, there was some talk about culprits. We can take that a little further and put a face on positions that will be cursory, for now, with more to come. Sort of like looking at sides of a story.
  • - We have to start with Grasso whose tenure at the Street got him some $140M and more. He did not work any harder than many, in the same period, who were paid essentially nothing in comparison to Grasso's take.
  • - Weill, of Citi, got things started in the sense, as the King of Capital. His efforts to heat up things really got the fictitious capital urn to bubble.
  • - Rubin, of Citi, was an absent overseer. Thomas Friedman had a piece in the New York Times in November (2008) that discussed how Rubin's role, or his gig on the booard, got in some $115M or so. Also, see WSJ Editorial, December 3, 2008. The WSJ asks, what did Rubin do for his pay? Both Rubin and Weill pushed Citi toward its disastrous dealings.
  • - Silverman of Cendant. See Roben Farzad's article in the Business Week of December 8, 2008, titled "Heads They Win, Tails You Lose," in which we see investors' red ink provide a take out of $100Ms for Silverman's pocket.
  • - Ben's, he of the blink, role was covered by John Cassidy, in the New Yorker, December 1, 2008, "Anatomy of a Meltdown," where Ben is depicted as persisting in not wanting to call a bubble a bubble. No, we have to deal with poop oops, he says.
  • - Owner of Chrysler who jointly was owner of Mervyn's who recently declared bankruptcy and destroyed the lives (and fortunes) of oodles of workers while the private equity investors got their large mint.
Remarks:

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

09/15/2009 -- Lessons, one year after Lehman. Also, Time on culprits.

06/17/2009 -- Notice the absence of Milken.

12/17/2008 -- USA Today had their list of culprits.

12/06/2008 -- So, as well as players, we can list things to discuss further.

Modified: 04/03/2011

Wednesday, December 3, 2008

Other side of the pond

The engineering oops focus to date has dealt with this side of the pond, for the most part. Today, we get motivation from over there. Flightblogger released an analysis done by Airbus on the problems of the 787.

Well, we all knew that there were problems ever since the rollout of the 'Potemkin Dreamliner' on 07/08/07 in which an empty shell was glorified as if it were ready to fly. Leelaw wrote (9/4/07 12:06 PM): It's beginning to look like the potential negative legal, financial, and PR consequences resulting from the unfolding "Tale of the Potemkin Dreamliner," could make the process of recovering from the "Defense Procurement Scandal of '03" and/or the "Industrialisation Meltdown of '97-98" seem like relative cakewalks.

As of today, we do not have a date for first flight which is probably good if it reflects that Boeing is being more thorough in collecting the information required to firm up the plan.

Given the list of issues in the above report, it may be awhile before there is more firm information. The last poll here suggested that 2010 was the likely deliver date which would could happen with a first flight anytime in mid-2009.

The following was not invented here (seen in a flightblogger comment):
What will happen first? The first pitch at the new Yankee Stadium or 787 first flight?

Remarks:

09/02/2009 -- Lets face it, folks, undecidability needs to be discussed and adopted in any complex situational setting, especially if computers are involved. Only hubris pushes us to make loud exclamations about what we're going to do in the future.

07/14/2009 -- Nope, confounding continues.

05/18/2009 -- Testing in flight is within sight.

12/12/2008 -- 787 delays continue.

Modified: 09/02/2009

Wednesday, November 26, 2008

Thanksgiving, again

It's been a year since the financial view was added to that of program management. But, oops abound everywhere, including medicine. It's how we expect oops and then handle them, when they arise, that is important.

For the financial part, things just fell apart this year, though it was predictable. So many things have gone wrong, what with fairy dusting, happy talking, quirky quants, and more. We saw that financial engineering is so in name only.

But, too, the real engineers have had their problems, probably mostly attributable more to management idiocy than to any engineering downside. But, one wonders if the Systems Engineers may not have had a comeuppance that has been overdue. We have to ask what outsourcing lessons are going to be learned.

Now, there are commonalities, between the above finance and engineering views, that go beyond the use of mathematics and computing. What in finance is fiduciary duty is a little more complicated for an airplane program. That is, is rushing the job analogous to putting money in one's pocket? The programs needs to remember that a plane has to fly, do so well, keep people safe, work within cost, make money, and a number of other things.

The medical oops can be instructive, as in many cases protocol can outweigh data, yet there are issues of cost and quasi-empiricism that need to be considered. So, using examples from the medical disciplines can help in discussing finance and engineering.

Remarks:

05/18/2009 -- Testing in flight is within sight.

03/25/2009 -- Rhetoric can be fun, but we have to get into these issues with depth and technicalities.

01/18/2009 - We even need to look at why we need finance.

2/12/2008 -- 787 delays continue.

12/01/2008 -- We need to learn what we might be taught about money by Islamic Finance.

Modified: 05/18/2009

Tuesday, November 25, 2008

Toxic securities

Many point to particular things, such as sub-prime mortgages or tranche, and similar, methods, as the primary causes of the current mess. But, as we saw recently with the taxpayers paying for a bank to take toxic things off of the CitiGroup balance, the issues are more wide-ranging.

We can say that the systemic problem is deeper than we would like to believe. Essentially, a misuse of mathematics and computation are a couple prime factors that we need to get a handle on. Too, money-by-fiat (supported by a gab standard) is an important factor, too.

A WSJ article today was brave enough to suggest that we ought to re-define banking. To bad, we cannot just stop and start over.

So, where to go from here?

Remarks:

08/01/2013 -- We're relook at this as we consider the good side (as if there is one) of financial engineering.

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

11/04/2010 -- Big Ben is still putting us at risk and trashing the savers.

07/23/2009 -- After the bust and the rebound, toxic assets are still a problem due to tranche realities.

06/07/2009 -- Say what?

03/25/2009 -- Rhetoric can be fun, but we have to get into these issues with depth and technicalities.

02/13/2009 -- ASF 2009 shows that regulations abound; these, no doubt, need to be re-addressed for overlap, coherency, and such. As WFB, Jr said: Stop!! But, why do we need regulatory oversight to remind these people about fiduciary duty.

01/18/2009 - We even need to look at why we need finance.

12/01/2008 -- We need to learn what we might be taught about money by Islamic Finance.

11/26/2008 -- After the recent bailout news from the Feb, the government will own about 1/2 of the economy. How can enticing the consumer into even more debt be the answer?

Modified: 08/01/2013

Sunday, November 23, 2008

What the hell happened here

Well, I have to admit that I wasn't paying attention to what was going on in the finance world for some very good reasons that I'll get into at some point, as they are apropos to the subject. So, during the past year, I've been reading like mad to see what was what and to catch up with the economy. As I got into the details, I kept thinking what idiot thought of this. Oh, that is crazy. Sheesh, folks, how did casino capitalism get so entrenched?

I quit feeling behind, and ignorant, when the golden boys of Goldman Sachs (and Citi and ...) took a hit, and analysis started to look for the culprits behind the mess. At that point, I was vindicated, again, for several reasons that will be discussed. Who said that those guys were the best and brightest?

Then, of late CitiGroup is under the gun. If my memory is correct, Weill (their CEO until 2003, the King of Capital) was instrumental in getting the leveraging game going again (yes, after the 1929 crash, leveraging was verboten - Weill argued successfully for a relaxation). So, that Citi wrestles with their current problem might just be poetic justice.

Let's look at some issues, that will have to be reviewed further, with a few comments now.
  • - Where did the idea come in that the market (as defined by those instruments associated with the DOW - Modigliani aside) was the key economic indicator? That is, with the expenditures of all this human and computer labor, CBOE, and journalistic interest, that is a whole lot of ado about not much. What does Citi care that they're at $3? Oh yes, Weill, and others, took a pocket book hit. An earlier post looked at the irony of trying to use a random walk as the basis for future certainty. Idiotic, to the extreme.
  • - How is it that we have the consumer side as a very large factor in the economic equation (macro), yet we set up the whole game so that the majority only fall into an endless indentured servant state? Yes, isn't that stupid? At the same time, we let the fat cat pockets suck the life out of all but a fraction of a percent of the rest. Something stinks here. Consumer Reports had an ad (USA Today, 11/24/2008) stating that consumer debt is near $1T (yes, trillion - see FRB numbers for Sept 2008). How can there be a continuation of the manic rate of consumer expenditure with that heavy load?
  • - How is it that about 100 people can account for the extraction of $21B from the market into their pockets for the past 5 years (WSJ article)? At the same time, a very many were essentially without even the basics.
Remarks:

08/01/2013 -- Ben cannot unwind or taper downhe has too many Doves. We'll have to get back to the king thing (yes, the divine rights of the CEO, new royalty, in other words) and dampening of these types by a new outlook (Magna-Carta'ísh).

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

04/01/2011 -- The last man wants the old days back.

01/27/2010 -- It's really ca-pital-sino.

09/15/2009 -- Lessons, one year after Lehman. Also, Time on culprits.

08/17/2009 -- Books on the credit crunch. This crunch involved "macroeconomic imbalances, greedy and incompetent bankers, and fraudulent American homebuyers."

08/17/2009 -- As promised, FEDaerated is here.

07/31/2009 -- Let's see, 5,000 got over $1M for services rendered. Well, that's probably a sign of being a best-and-brightest, at least to certain eyes; it's called rolling-in-the-dough.

Now, this can be used to illustrate how the game it to fill the pockets of a small set to an exorbitant amount. Does the game need to be that way? Hell no. We'll look at that some more.

06/17/2009 -- Michael Milken says that structure counts (see WSJ article). Remember, the theme here is that a lot of securitization is bunk, many times. Sheesh, talk about a perpetual motion machine, always moving monies from the pockets of the hapless to that of the fat cats.

06/07/2009 -- Say what?

04/17/2009 -- Minsky and the facts of ephemeral value are a couple of topics on the list.

03/25/2009 -- Rhetoric can be fun, but we have to get into these issues with depth and technicalities.

03/11/2009 -- We also need to look at accounting's role messing up affairs.

01/18/2009 - We even need to look at why we need finance.

12/18/2008 -- Leveraging, in and of itself, is not bad.

12/01/2008 -- We need to learn what we might be taught about money by Islamic Finance among other things.

Modified: 08/01/2013

Thursday, November 20, 2008

Boon and bust

Boons (and booms) are Nooops and Aahs; busts are oops (financial or otherwise).

Today, the DOW close (down 444.99 to 7,552.29) is getting back to an area that we have not seen for several years; the low close today beats the 2003 lowest close, so now we're talking back to 1998. A year ago (the high close near 14K), many knew that this downturn was a very likely (and, perhaps, long overdue) outcome.

How low can it go? Well, would not it be great if we could go back to the 1995 level and restart (with a good look at idiocy and fairy dusting) the economy. Ah, the genie is out of the bottle. CBOE exists; computation is the main tool.

In the period since then 1995, we could count several bubbles. However, too, we saw a very large increase in the pockets of a few while the many have been left holding the bag or have been left without any bag.

The financial services industry made outrageous money. Do not forget the millions (tens and tens) that Grasso took out of his supposedly public service job.

So, are the richer smarter? Well, they play some type of game better, assuming that we can take accumulation of wealth as an adequate measure (an open issue, including T-issues).

Remarks:

12/01/2008 -- Well, in the past week, the markets went up about 19% such as to give some hope. Then, today, they crashed again. There are several de-stablizing factors that we ought to look at, some of these we can control.

11/24/2008 -- In the last two days, the DOW (and other indexes) were up 11% which is a record or close to one. With this type of volatility, how does one plan? Well, that's one problem to be considered.

Modified: 12/05/2008

Tuesday, November 18, 2008

NoooP and aah II

One thing that engineers, who deal with real domains, can do is test with something real, or in a somewhat realistic situation, as was done recently with the 787 wing box. There is an explanatory post at the Seattle P-I that includes links to videos of the 787 test. Too, there is a link to a similar test for the 777 test, similar in the sense that the 787 will still be undergoing the wing load test.

So, congratulations are in order on several fronts.

As said, the test results agreed with the analytic predictions. That is good and an example of the modern way (we know just how much thought, effort, and evaluation went into the massive analytic framework supported by computing); yet, there is an open question that we'll continue to bring up as to when a model is sufficient to be considered data.

An earlier post, in this blog, mentioned a site that will contain information about 787 technical milestones which appeals to those who want to see details for themselves. Too, the post discussed the problems in financial engineering of having any semblance of empiricism beyond the questionable metric of who has more money.

Expect more of a focus in the future, backed up technically.

Remarks:

01/19/2011 -- Update1 and Update2. The focus now will be mostly the idiots of economics/finance.

05/18/2009 -- Testing in flight is within sight.

Modified: 01/19/2011

Saturday, November 15, 2008

Stable money

Earlier, a post mentioned that 'gab standard' was a good description of the current affairs in handling money. The phrasing came from a WSJ article by Judy Shelton. Since then, several posts have used gab standard in discussing financial oops, such as those things dealing with fiction and leveraging.

Yesterday, in her "Stable Money is the Key to recovery" (WSJ), Judy expands further on the issues that stem from going off a basis (it was gold).

Having an underlying for money (money as a derivative, so to speak) is something to discuss as we go further into this.

Remarks:

01/15/2015 -- One of the most-read, of late, as things do look unsettling. Did we learn anything?

08/01/2013 -- Ben cannot unwind or taper downhe has too many Doves. We'll have to get back to the king thing (yes, the divine rights of the CEO, new royalty, in other words) and dampening of these types by a new outlook (Magna-Carta'ísh).

06/23/2013 -- Ben sure has talked up (gabbed to) the investors; a recent downturn offers a lot to think about.

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

11/02/2010 -- Two years later, the message is the same, except some changes have occurred. Of real note is that the jobless rate is high; out-housing really set up for that. Also, we need to re-look at that learned from the 'vons' guys, Ludwig and Friedrich. See Near Zero.

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

09/08/2009 -- Heterodox covers several things, but here the suggestion leans towards the energy-based approach to money and value.

08/24/2009 -- Last year, Ben blinked and panicked. He frantically pulled out all stops as if with no thought for tomorrow. Now, he has no use for 'mea culpa' big daddy that he is. Ben, start to unwind now. The Vienna School's view that these things are undecidable (which is a computational issue) is right on.

08/10/2009 -- As promised, FEDaerated is here.

02/18/2009 -- We can look at why securities become toxic, almost by necessity.

02/13/2009 -- Debate continues.

01/18/2009 - We even need to look at why we need finance.

12/01/2008 -- We need to learn what we might be taught about money by Islamic Finance.

11/18/2008 -- Yesterday, the WSJ had an opinion article titled: "To prevent bubbles, restrain the Fed". The Fed has been on record many times saying that we cannot see bubbles as they happen. What? The approach has been to clean up the mess after the fact (as if the market capitalist cannot be toity trained). Well, as said above, the gab standard is troublesome, for many reasons.

Modified: 01/15/2015

Wednesday, November 12, 2008

Hawker spooked

Ah, talk about oops.

Hawker is an aircraft firm that was owned by Raytheon (RTN) until a little bit ago. Hawker's sales are in the low billions. Recently, the downturn has made an impact. First, there were the issues related to exorbitant energy costs. Then, the credit crunch's changes to the face of the luxury market are problematic.

Hawker is interesting as in the same town there is a sister firm (SPR out of BA) who had a little better timing. But, one might say that the Hawker deal was influenced by the ease with which the sister firm enriched a small set of peoples (we need to count those impoverished by the deal, though).

Both of these were entities taken from a larger firm via a buyout which was led by a private equity company (OCX.TO) that had partners who were golden (GS, MS, et al) in the age just past. In fact, these golden firms have already changed its stripes (got a handout, to boot). Yet, the effect from the two buyouts linger in Wichita (not all these effects are listed here).

For SPR, those who bought into the IPO are holding stock that is, at least, half of what they paid. In many cases, the loss is much more. An IPO is how debt is spread. Oh, didn't we hear recently that some techniques for spreading risk didn't pan out as expected?

Hawker didn't get their IPO opportunity as the credit crunch came along and changed the context of the economy. What does Hawker have instead? Over $2B in debt that would take them years to pay even with the most austere of budgeting. So, this firm is not unlike someone with a mortgage that is too much for them to handle.

Why even mention Hawker along with oops? Well, they have had their recent talks with the press. Therefore, it's public knowledge that they owe big time and really have to strive to maintain the debt. Too, and more importantly, these two firms, in Wichita, can be juxtaposed for analysis.

There is a lot of overlap in their characteristics; it could be that the differences as far as the buyouts may be of more interest. These differences can be used to tell the tale of what went wrong with Wall Street, and others, between the tech bust and the current downturn.

Of course, the intent would be mainly to elucidate the issues such that reasonable discussion about fixes could help us to do better in the future. That is, some do want change that is an improvement such that they can live their working years, and retire, with a little grace. For the others, we need to somehow limit the effect of their gaming.

Remarks:

06/08/2015 -- Continuation of the theme. Yes, Hawker ought to have been spooked. But, management was trying to pay a ton load of debt by scraping pennies from the workers (penny wise, pound foolish goes the saying). But, by then, the interlopers had already gotten their jollies.

06/08/2014 -- Does time tell?

09/16/2013 -- This was written in 2008. Turns out that they ought to have been spooked. Why could not some of the brains have had better foresight?

09/16/2013 -- So, the five year retrospective time. Business week devotes a whole issue. It will be interesting to read all of the perspectives, WSJ, FT, etc. We will have to say some things about Raytheon's push out of Hawker and its subsequent bankruptcy. Like Spirit's split from Boeing, wishful thinking on the part of management and the company led to problematic results (for a lot of people).

05/07/2013 Case of the sucking of life out of a firm?

03/15/2013 -- Some controversy in the way SPR fired some people. See Weagle.

05/30/2012 -- As covered by flightblogger.

05/04/2012 -- A recent filing relates to this theme.

12/23/2010 -- Do oops continue to emerge? What might be considered not unlike 'blackmail' we see Kansas bellying up to the bar (millions in incentives) to save only 2/3rds of the jobs. Way to go!

01/27/2009 -- Lessons to be learned (as opposed to having been learnt) needs attention.

Modified: 06/08/2015

Thursday, November 6, 2008

Our economy

Yes, the economy belongs to us, though some seem to think that the economy belongs to the fat cats or to the gamers or to those in power, where the majority are just mere resources to be exploited at the will of those who think that they own the economy.

Ah, there have already been several posts related to these themes.

Well, there were some fundamental changes that have appeared since Reagan and probably from before. Some of these are theoretically sound; many others are only an extension of the gaming ontology. So, expect that changing back to something reasonable ought to be on the plate.

For instance, there is much more emphasis on stock ownership as a means to wealth. Hah!! That is a near-zero game, folks. For every example of success that we can hold up, we'll have 100 (probably 1000 or a much larger multiple) or more examples of the down side. Think of it this way; every billionaire has associated with him or her oodles of those who lost. Okay, to be fair, many would have ridden the coat tails and obtained success. But, we need to look at the other side as it is a much larger number, almost a type of leverage.

Actually, that is a leverage number that we need to describe as part of the argument against 'the market' of the idealogues (mostly rogues wanting enrichment at the expense of others - yes). One question is how can we ever get the needed accounting; that hedge funds, and some others, want no oversight (or regulation) confound the issue.

Two articles this week touch upon the problem. In one, the question is raised: how good is the market in the long run (Business Week) for wealth building? Well, it's good in a very long run. For the individual investor, we must really look at better ways (we'll have to go further into issues of casino capitalism and more).

For another example (WSJ) of the problems that we face, consider this. Take an insurance company that wants to offer reasonably priced and benefited annuities. Well, the mathematics is fairly plain. How leveraging of the negative sort became so wide-spread is just indicative of our continual wishing for the easy way (quick bucks, etc.). Now, how is the insurance company supposed to found the annuities that it has to sell competitively since there are others making similar offers?

One current means is via stock. Okay. Now, the market supporting the stock has become more gamed by casino capitalism than by real concern for the future. Annuities are long term instruments. How are they to be covered with short-term wealth goals? What does the company do if it needs to pay out when the market is down?

The answer to that question wasn't clear yet needs some consideration.

Well, expect more of this same type of thing. We'll get technical, too, in order to show how the claims seen here in this blog, that mathematics has been mis-used, developed.

Remarks:

10/13/2011 -- Finally, something like OWS.

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

01/27/2010 -- It's really ca-pital-sino.

10/11/2009 -- Discussion has gone over to FED-aerated. Note the 10/11/2009 Remarks about the Business Week article on India's progress' inhibitors. 'Near zero' recognizes that some always suffer more than others, especially in win-win situations, as the whole notion of characterization minimizes visceral reactions by diminishing the real in favor of the abstracted (ah, the modern world, you say?).

08/18/2009 -- As promised, FEDaerated is here.

03/30/2009 -- Near-zero will be looked at more closely.

01/18/2009 - We even need to look at why we need finance.

12/01/2008 -- We need to learn what we might be taught about money by Islamic Finance.

11/12/2008 - a few more words and links were added to this important subject.

Modified: 10/13/2011

Saturday, November 1, 2008

Retiree resources

From time to time, there will be a post with links related to a subject of interest to retirees. The below is an employment search list. For financial and general topics, Yahoo Finance has a list of comments collected daily for over a year.

Friday, October 31, 2008

Outsourcing as a panacea

As said before, outsourcing is analogous to leveraging which seems to be a major factor in the current meltdown of the economy. In terms of outsourcing, happy thinking does not make things real; all it does is cloud the issues. Engineers have to know to make it real which implies up-close and hands-on experience.

Seattle P-I reports that Boeing plans to keep more engineering in-house for future programs (what about the current?). Does that appease SPEEA?

Remarks:

09/04/2009 -- Out of the house.

09/02/2009 -- Lets face it, folks, undecidability needs to be discussed and adopted in any complex situational setting, especially if computers are involved. Only hubris pushes us to make loud exclamations about what we're going to do in the future.

07/29/2009 --Nope, confounding continues. Yes, there are, at least, 5 issues to be considered.

05/18/2009 -- Testing in flight is within sight.

01/28/2009 -- Necessity of horses for the carts.

12/18/2008 -- Leveraging, in and of itself, is not bad.

11/01/2008 -- Or is it from real insight?

There is the saying that if one wants something done right, then do it yourself. Of course, there are many things that we cannot do ourselves, hence we need the expertise (and the good graces, sometimes) of others.

There is much to talk about on this subject, such as does not Boeing know that within its own boundaries it could not allow stove-piping? So, why would that not be an issue with disparate (in many way, geographically, politically, ...) parties?

Methinks that a marvelous engineering company needs to get its footing back. It is hard to believe the silliness displayed last fall (Cramming for the exam, Rush job, A new game (risky business), ...). This whole thing will bear oodles of scrutiny ex post facto.

Modified: 09/04/2009

Thursday, October 30, 2008

Fiduciary duty

So, what are these duties? Somehow, the financial folks got their pocket lining as their main goal. It's not just the financial folks, as CEOs, in general, seem to put their own reward first.

Now, as any good military officer will tell you, such behavior stinks. Yet, we have let these CEO types have their own way; why? Financial engineering surely has not been exemplary as its gaming ontology exacerbates the problems.

There are several questions to ponder: what trust is expected? how do we judge whether they are being fulfilled? ...

That the Feb and Treasury are experimenting in real-time does not negate the need for analysis related to these issues. For now, savers will continued to be sacked.

But, that has to do with the cyclic nature of business, we're told. Well, those that argue thusly, with the same breath, run on about the market growing over time. They need to realize that a near monotonically increasing function would result from getting away from the gab standard. This we'll look at more closely, too.

Remarks:

11/29/2011 -- Ah, Big Ben helped his friends more than he said, at the time.

06/07/2009 -- Say what?

01/26/2009 -- Lessons to be learned (as opposed to learnt), including, by necessity, Ponzi and bringing back security.

11/01/2008 -- One has to ask what is the parallel in engineering, and program management, to the fiduciary duty of finance. In regard to the 787 project, much has happened with regard to the schedule, the suppliers, and more. Boeing announced some insights about its 787 planning. Before that, the idiocy of a truncated (abbreviated) test cycle was changed.

Reminder: at this point last year (we can pinpoint the specific dates), there was still some talk about delivering in May 2008.

Modified: 11/29/2011

Tuesday, October 28, 2008

Secure and security

It's rather ironic that modern finance uses 'security' to name their instruments when any notion of 'secure' applied to these is problematic. Okay, risk management developed, in part, to handle the uncertainties. Yet, finance depends upon trust. We expect those to whom we entrust our money to show fiduciary dutifulness, for one.

That, for so long, things ran amok has many contributing factors and factions. Amongst these is thinking that finance can be engineered; can that notion ever be anything but twisted?

Remarks:

02/13/2009 -- Securities are toxic, in many cases, despite regulatory oversight.

01/18/2009 - We even need to look at why we need finance.

Modified: 02/13/2009

Monday, October 27, 2008

Poll Completion 6

The Sixth Poll finished 10/01/2008.


Support bet2give: 787 will test flight in 2008.

Prior polls: First, second, third, fourth, fifth.

Remarks:

01/20/2013 -- See, will the 787 test flight in Q2 2009?

Modified: 01/20/2013

Sunday, October 26, 2008

Leveraging and more

Yes, as we did with fiction and finance, we can also look at the oops related to leveraging. At one time, leveraging was consider not smart. Think of it, would you offer a large loan without any collateral (that you could verify in value) for some hair-brained scheme (how do you know how to evaluate the scheme? well, this is where skeptical thinking and experience come in).

So, in trying to catch up with the madness (having left school 30+ years ago and frankly not paying attention to the activities of idiots with money), reading like mad, watching results being analyzed (usually, the analysis was trifling and without substance), and considering how all this madness got started (related to age old issue, I know), on several occasions it was necessary to look at what it means to pile up debt.

As an aside, in Wichita, Hawker Beechcraft is loaded with debt from their split from Raytheon. The step of going IPO in order to spread the hurt, in little pieces, to others has not happened, yet. That whole game needs to be looked at, too. Hawker has a maintenance cost of 0.2B yearly; that must smart. No amount of belt-tightening or smart maneuvers can retire that level of debt. No, it requires the facilities of a market (who would want to buy?).

Leverage and truth -- March 25 . Looked at the underlying theoretics, which are usually fairly dismal in economics (the name fits perfectly). Ah, reinsurance is mentioned. Yes, didn't everyone think that risk was spread ad infinitum (Berkeley would love it!). And, then we have AIG, do we not?

Leverage and truth II -- March 31. Ah yes, the market dogma. It is touted by those whose pockets get lined immensely. Then, we have those who argue not zero-sum (hah!). What we'll have to do here is show that the best that we can do is near zero-sum.

Leverage and truth III -- May 19. Even by this time, I wasn't ready to accept all the idiotic changes to lessons from the 30s. We need to somehow make it clear that the CitiBank guy was wrong (Weill - well, he has his money) - Marx actually has a better take. Oh well.

Leveraging and oops -- May 19. So, we know that the financial community went out on the limb with leveraging. Do we not know that outsourcing (of certain varieties) is a type of leveraging? One problem with the engineering outsource is that of keeping it real (oops of this nature were coincidental to the start of this blog) and avoiding happy thinking. (Note 11/01/2008 - Well, now, Boeing is claiming insights about the possible banes of outsourcing.)

To the hilt -- August 19. Yes, like any addiction, the thing of going out on a limb grabs and does not allow one to let go. Evidently, to look at how smart people start to look like idiots. Of course, we really need to look at some physical binding (not gabbing) for money, that is other than a precious metal.

The idea here is to not just gab (that is the current basis) but to get technical and specific. After all, engineering computing handles similar issues, including the need to resolve several types of issues related to modeling, verification, and validation.

Oh, yes, the economy seems to be run like a real-time game. How do we get some notion of rigor applied? Well, it's not by chasing money.

Remarks:

05/30/2012 -- As covered by flightblogger.

05/04/2012 -- A recent filing relates to this theme.

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

03/17/2011 -- Politicos might actually be compounding the issues.

12/23/2010 -- Do oops continue to emerge?

07/23/2009 -- After the bust and the rebound, toxic assets are still a problem due to tranche realities.

12/18/2008 -- Leveraging, in and of itself, is not bad.

Modified: 05/30/2012

Friday, October 24, 2008

Savers sacked

There's talk that the Fed is considering lowering its rate to 0.75. Gosh, Ben, you blinked before. Now, you're desperate? [Note, originally pointed to Yahoo Finance page which has expired]

Look, Ben. That market and game that gets your attention is not worth its salt beyond being a field for fraud and froth.

So, you're going to throw more pixie dust at those who you want to put their money in stock. Well, Alan's low rate is considered a factor in the mess. Why should you follow suit with the equity bias (yes, keep those gamers on the Street and at the CBOE satisfied)?

In fact, it looks as if we need to bolster the models that are driving decisions; as well, why not start to consider getting beyond the gab standard, to start to remove the fiction (Marx' view, 7'oops7 view) out of finance?

Remarks:

08/01/2013 -- Ben cannot unwind or taper downhe has too many Doves. We'll have to get back to the king thing (yes, the divine rights of the CEO, new royalty, in other words) and dampening of these types by a new outlook (Magna-Carta'ísh).

06/23/2013 -- Ben sure has talked up (gabbed to) the investors; a recent downturn offers a lot to think about.

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

09/09/2009 -- Alan's reign will be looked at, in time.

08/24/2009 -- Last year, Ben blinked and panicked. He frantically pulled out all stops as if with no thought for tomorrow. Now, he has no use for 'mea culpa' big daddy that he is. Ben, start to unwind now. The Vienna School's view that these things are undecidable (which is a computational issue) is right on.

08/10/2009 -- As promised, FEDaerated is here.

07/31/2009 -- Let's see, 5,000 got over $1M for services rendered. Well, that's probably a sign of being a best-and-brightest, at least to certain eyes; it's called rolling-in-the-dough.

Now, this can be used to illustrate how the game it to fill the pockets of a small set to an exorbitant amount. Does the game need to be that way? Hell no. We'll look at that some more.

07/30/2009 -- The WSJ reports that Ben lost last year, despite his best efforts to keep the equity market afloat. Gosh, was there not a time when those guys had to forgo personal gain? Well, it's obvious from his portfolio that Ben's not on the savers' side. Nice to know. You see, Ben, some of us aren't looking to put our hands into the pockets of others (as do the best and brightest). No, we're looking for a little gain with preserved principle. Get it?

07/16/2009 -- Well, effects from several months of meddling (big Ben's economy) can be analyzed. Yet, the main questions is where is all this going? Systemic issues are still there.

04/25/2009 -- People matter.

12/18/2008 -- Savers still take it on the nose. We need to address inherent differences between debt and equity (Modigliani notwithstanding).

10/30/2008 -- A more robust basis is possible, but it would require better behavior on the part of those involved.

Modified: 08/01/2013

Fairy dust

Fairy dust, like its sib Happy Talk, has been part of the run up in business from a shaky start to a very flimsy structure. That the stock markets are dropping severely today (before the open of the US markets) indicates that the recent dust has not worked; that it sometimes catches into a frenzy is very much suitable for study.

Part of the dust influenced Alan's (he of the Congressional query, yesterday) long-time belief that banks (and other capitalistic organizations) could police themselves, that derivatives were magical (did not need scrutiny), and that bubbles could not be seen.

Yes, Alan, we cannot see the future. Science, therefore, has ex post facto eyes, for the most part. Any forward looking is highly constrained. It is mainly the business types who go out on the limb, extrapolating like there is no tomorrow, carrying with them the rest of us into perdition.

Until economics and business is more empirically (actually quasi-empirically) based, these burstings will continue.

Gosh, even the quants started to believe in their magic and led the financial engineers astray.

How to stop this, as WFB asked? Well, there are several ways. Expect these to be addressed in an incremental manner, including more technical analysis of the mathematical problems.

Remarks:

07/31/2013 -- Ben cannot unwind or taper downhe has too many Doves.

03/23/2012 -- Ben is doing a series of four lectures on his, and the FED's, role.

10/10/2011 -- The public is recognizing that we've been 'fairy dusted' the past few years. Was it meant to be a means of cover-up? Hopefully, Big Ben is seen to be as much of a culprit.

04/19/2011 -- On territory and its map.

01/19/2011 -- The quirks of capitalism are rank, not by necessity.

11/04/2010 -- Big Ben is still putting us at risk and trashing the savers.

09/15/2009 -- Lessons, one year after Lehman. Also, Time on culprits. Ben is happy-talking, again.

09/09/2009 -- Alan's reign will be looked at, in time.

08/31/2009 -- Go to FEDaerated to see Quant series that will expand to cover topics both theoretical and technical.

08/10/2009 -- As promised, FEDaerated is here.

05/18/2009 -- Oh yes, got us in a mess and still wants the bonus.

04/17/2009 -- Minsky and the facts of ephemeral value are a couple of topics on the list.

12/17/2008 -- Shoes continue to drop, but they are of several types.

11/20/2008 -- Boon and bust, the way of fairy dust.

Modified: 07/31/2013