Tuesday, October 21, 2008

Truth, fiction, and finance

As insight has grown, via the analysis needed to blog somewhat coherently, one theme that kept arising dealt with 'fiction' as it seems to apply to what is known about finance. Another theme dealt with leveraging which, at one time, was not condoned. The themes run across other blogs and seem disorderly.

One way to organize might be to have some integrating posts that can then be kept up to date and that can bridge views whereas categories apply only within a blog.

So, here is summary of three posts.

Truth, fiction, and finance -- Notice that the date was January. By then it was clear that things needed to unwind, but actions of the Fed and its cohorts kept the lid on the boiling pot. Well, the botched up workings have been patched over; steam still leaks out of the pipes. Perhaps, some semblance of settling down will appear in the future; one truth is that fat cats will have big pockets; the rest of the populace will have their crumbs. Oh, yes, the coming elections will have some influence.

Truth, fiction, and finance II
-- March. As the insight grew, incredulity did too. What have those supposedly smart (best and brightest) idiots done? Gosh, the mess seems to have no end. How does one get the message out that the lemmings are all running after inherently unstable states?

Truth, fiction, and finance III -- May. All along, the 7oops7 message was that modern practices are made more difficult due to the computer; it's provable, yet the attention does not go there for several reasons which we'll have to address. But, we can all see that something like a plane has to fly, pass tests, and then perform in the world. What the heck does the silly instrument designed by the financial engineer have to do? Oh, yes. Move money from the pockets of the many to that of the few; looking at the fatness of some cats and the general thinness of the populace, their little bits of cleverness did work.

But, the idea is to not be only critical, even though there are words like this: It got even worse throughout the year, from Ben's blink, through spitting in the face of savers, to bailouts (what?) of those touting capitalism.

Rather, we'll slowly propose those truths that can be taken as solid enough for planning the future.

Remarks:

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

09/19/2013 -- To some, evidently, grabbing oodles of money, without due consideration of ramifications to others or to the common weal, is the smartest thing; but, we do know that virtue is smart, to boot. Even the secularists are trying hard to show how their worldview can lead to right living (as in, they do not need God to have a conscience). And, what virtue might be prime important to this discussion? Prudence (see Remarks, this day).

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'√≠sh).

09/29/2011 -- The question remains. Even with 'financial engineering' what is the science behind finance? Gaming, only? Who has the basic ontology (other than wealth for the few)?

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

04/19/2011 -- We have to get back to the basics.

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

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

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.

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

06/17/2009 -- A fresh look will be needed.

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.

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

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

01/29/2009 -- Well, it just gets more interesting. Pick up the 1/28/09 Wall Street Journal and look at an article about a 'proliferation' of ponzi schemes. We all know about Madoff as he mis-handled a lot of moeney over a long period of time. But, a lot of states are finding that they have a madeoff/ponzi going on within their borders. How much of finance is a sham?

The WSJ mentions that the hedge funds' claims to high returns is one possible cause as people try to duplicate that. Sort of a Jones' keep up thing, we can suppose. Well, a reading of hedge fund tacits raises all sorts of suspicions to the rational mind. Just how legit are these things and why are they even allowed? Are we that much into some mass insanity?

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.

10/23/2008 -- Listening to Alan makes me wonder how modern mathematics encourages fairy dusting via computation. We'll go into that deeply.

Modified: 01/15/2015

1 comment:

Anonymous said...

Yesterday Hawker, who has a large plant in Wichita, told its workers that they need to belt-tighten. Why?

Well, there is a little problem with 2.3B of debt that is costing about 0.2B per year.

That debt was supposed to be offset by an IPO, but Hawker got caught up in a timing problem.

Spirit Aerosystems, the same city, was fortunate enough to hit the easy money, loose regulations, debt mania times at the right moment.

So, Spirit's managers made oodles; the stockholders are holding the bag, though, since the price is way down.

What amount of belt-tightening by Hawker workers can retire a 2.3B debt? No, this situation is mostly from management idiocy.

Who can blame them? The best and brightest brought this on us; now GS is out of investment banking.