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.


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?


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.

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).


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.


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.


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.


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.


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.