Wednesday, September 18, 2013

Jerk or not

We all know who is a jerk and who is not. Agree? Other connotations of the term abound. But, here, we'll use this to talk about how mathematics gets people going awry (jerk from 2008).

Example? Yes, like Ben and his crew continuing to slap savers silly. He started this when things were getting hairy; he had the duty to set things aright; but, Ben's view of this seems to not be firmly based despite his protestations of being data driven. Why is it that interest ought to be subsidized into an artificial state?

So, we'll have to have a little discussion to fill him in. But, given our experience so far, it'll take some time.


As said before, all's not lost. Some accountants see a change that has been problematic. In short, it deals with pushing too many theoretically unsound things (my characterization) and losing any grasp on virtue. What? Such a term used in the business context?

Well, consider savers. These are those who are more than just risk averse; they put their actions where their mouth is by being prudent (never heard of this virtue?). One could argue that prudence can be expected, too, for fiscal responsibility; where did that concept go?


WSJ look at a
mortgage-backed bond
Some claim that accounting has removed prudence in lieu of theoretical nonsense leading to situations, such as annual reports that are incomprehensible. Actually, the computer can make things go beyond our grasp, too (and, this is how I'm using singularity). The whole bit that underpins our world seems to have been given a shaky basis (was this done on purpose, to allow rooking the people? - or, through stupidity?). To wit? Look at this graphic from the WSJ that we'll get into later. It follows one bond and it basis while talking about the tranching issues. The WSJ actually used "toxic" in their description (pick Graphics tab; also, my use four years ago).

So, we'll be talking more on prudence and such; of course, the side that argues that prudence is quaint (well, it seems to be for quants) is vocal, too. Note that the practitioners (who make money at the gaming are responding to Lords - these guys aren't angels, either). Then, we have China asking prudence of Ben and the Fed?

Get it? China talking virtue to the US who seems to be a crap-game junkey?


Now, the modern trend is toward mis-used mathematics and computing. How do we counter-balance this idiocy? Well, it won't be easy; the Harvard crowd is as much caught up as any (and, they have a proud (?) heritage of knowing about virtue). 

The idea is to use our humanness as the basis (how to do this is more simple than the brains let on) for discussion. And, to do this without letting issues of numbers (and facility with equations) become the focus. Sheesh, Ben. That data-driven argument is lame. 

So, on the Wiki page about prudence, they get a little mathematical. You see, they're talking derivatives (of a type that we see in nature, not the artifact that came out of financial engineering). And, they bring in the 3rd (jerk) which is the change in the 2nd (acceleration in the sense of some physical situations). Then, they go further to say that you're not prudent unless the 3rd is positive. 

That is categorically crap, folks, which we can discuss, as anyone wishes. You see, there is a subtle hint here that growth is essential in order to be (as in, being). And, "be" is related to having some property, okay (we're not talking ontology, except loosely)?

But, I can be prudent in my actions and choices without being a jerk (supposed to be a joke -- but, it's this type of thing that leads people to want to keep grabbing and grabbing - enough is enough). A 3rd of zero would imply a constant 2nd. Would you not still be in the region of prudency, thereby? Didn't think of that? 

Well, the text on the Wiki page does say that one meets risk by increasing savings. Not necessarily does one have to increase. It would depend upon many things related to the risk and it properties (note, object-biased viewpoint) at some point in time.


This one little example can be extended far and wide. For some reason (methinks it's due to the (supposed) success of cosmology and physics), people think of mathematics as being grandly competent to handle truth. The truth? Not so, and it goes way beyond the concerns raised by quasi-empiricism.

So, those who are fluent in mathematics, and agile thus, dance around (flit) and lord it over others. Tell me this isn't so, Ben, given your academic experiences. Well, we'll learn the impacts (good and bad) from Ben's choices (the past five years, let's say) in the future (over a period time, to boot). We all know that some type of mortgaging of future generations is going on (to which Ben is contributing). How can we get a handle on this?


I'll say one thing. Intuition will be necessary. Unfortunately, Ben hasn't shown us this, not that he couldn't do it if the fat cats, and politicos, weren't so adamant in getting their wants taken care of no matter how it might impact Main Street or the little people. But, search these blogs, and you'll see much written about the current state of affairs. Essentially, like some suggest, we are not any better off now than we were before the downturn. The next one could (will?) be even worse.


07/03/2014 -- The Magna Charta is a wonderful example for us to apply to provider (king)/user (baron) issues.

12/16/2013 -- HFT's contributions to the turmoil'd (froth'd) markets.

10/13/2013 -- Janet is awaiting in the wings.

Modified: 07/03/2014