Monday, October 20, 2008

Financial Engineering

The subject seems to be a new discipline that arose out of the computational framework of the 2000s. We'll have to look more deeply at it and its role in the current mess.

That is, this discipline plays heavily in the gaming ontology that has essentially put an unstable basis under our economic future. This we have to look at further, too.

We all ought to be skeptical of those who tout that 'engineering' solves problems, as if by necessity. The real engineers ought to get mad about this; gosh, what mindset would think of inventiveness as engineering? There may be a design aspect to engineering, but the discipline entails a whole lot more than just fancy thinking (it's applied science).

From one view, it looks as if 'financial engineering' is an offshoot of Operations Research which is a respected field, yet it too can be seen as just management science.

Ah, science. Any engineering discipline needs its underlying science. What science is behind financial engineering? This has been asked before.

The boss of the errant trader at SocGen, says of himself that he's a financial engineer and not a trading supervisor. Oh? So, an automotive engineer wouldn't know how to drive an auto?

Something is troubling about such a discipline using 'engineering' in its description.

But, on the other hand, wise airplane and process engineering can have it troubles too.


08/01/2013 -- We'll be looking at financial engineering, more closely.

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

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

09/02/2009 -- The supposedly best-and-brightest have led us on a perdition-directed path through mis-using mathematics and computation.

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

08/02/2009 -- Wait! More exposures: "computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else's expense." To anyone who isn't at Goldman Sachs or the like, does that appeal to you as the way that we ought to be handling our beans?

So, is this what financial engineering is all about? Sounds more like leeching.

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

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

03/30/2009 -- The WSJ today looks at the Future of Finance. The idea is that finance is like the cardiovascular system. Okay. So leeches are a good metaphor for the sucking out that we see. Like the AIG guy who was central to the losses that we the taxpayers are paying and who left with $300M. We'll be referring back to this discussion.

03/28/2009 -- Ties bind economics and engineering, reflecting on accounting and strategies for value assessment.

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

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

01/27/2009 -- Now a new day and way to consider these matters.

12/30/2008 -- Even Krugman asks why we have so many 'financial' engineers (who essentially work with bogus-ity) versus 'real' engineers. We'll look at that.

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.

10/23/2008 -- The whole notion here is how to improve matters, not just harp, blame-storm, or other useless undertakings. So, expect that the whole 'quant' framework is going to be analyzed. That ontology is the basis for the mess that as the most importance. Greed, malfeasance, and such are old-time problems. Truth engineering is required to handle the 'quant' issues.

Modified: 08/01/2013

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