Tuesday, September 9, 2008

Oops and more oops

As said before, ooops are everywhere and seem to abound. Ah, but we need to consider the other side, namely the Nooop and aah.

So, to keep it short, lets just look at a couple.

- Fannie and Freddie - this example (reactions by blogs) is almost archetypal for economics, with a core issue of free or fee. You see, these are close (one letter difference). But, they differ by a wide-range; the spectrum is as large as that of the open-source and proprietary stances (we need both). The real tragedy (see Remarks, for a greater tragedy) of the latest step is that common shareholders may lose (in fact, those that have already sold at a loss have ate it) while the 'fat cat' preferred holders will roll in the dough. Plus, former managers who ran these quasi-governmental entities to the ground have their monies and gigantic bonuses. As said before, that 'game' called the market is neither free or wise; and, those whose colored glasses argue for such need to look at quasi-empiricism and ponder a few things in regard to engineering mishaps (finance has taken technology and mathematics as the basis to build us a house-of-cards, essentially). The results of some newer methods are coming home to roost.

- Boeing stumbles again - at least, in terms of knowing how to relate to labor, if not categorically, then in particular instances (we'll go into this further at some point). How this will play out with the 787 will be of interest as the critical step of flying and testing in the air will be delayed, though we don't know if some other delay may have been lurking (so, there is a silver lining of sorts) and was about to reveal itself. The fact is that a whole lot of new technologies need to be proven. As comparison, the new Cessna program is planning for a 3-year period between first flight and first delivery. Boeing's truncated schedule looked suspicious from the beginning, to certain ontological views, that is. For some reason, an aura from high technology and applied mathematics distorted the sight of those who ought to have known better (again, more on this at some point, but for now, look at the early seeds and subsequent posts).


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

09/12/2009 -- Sandbox was used without definition. Let's discuss that concept.

09/11/2009 -- Win and lose. Everyone wants the former. The latter actually is what balances the equation.

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.

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

01/26/2009 -- Now a new day and way to consider these matters.

09/14/2008 -- Minsky's hierarchy has been invoked on several occasions on the finance side of the blog's focus. It has been suggested that we could use this as a guide. For instance, proper hedging and some types of speculation ought to be consider okay. But, then after that, things become playground/sandbox in nature and ought to be handled that way.

And, despite the use of 'hedge' by some funds, such as Harvard's fund that has grown immensely, the types of returns that they have enjoyed come by either malfeasance (let us see what you're doing so that we can make our own assessment) or they're beyond speculation (it's near-zero sum, folks, despite our wish that we can justify huge returns). That is, exhorbitant gains come out of the pockets of the hapless, even if the public face might be that of a competitor, such as another hedge fund.

The real tragedy is that the Harvard's wins (and similar examples) lure folks like the CALPERS to think that they need to do the same thing. Even municipals are getting lured into the game.

But, here, via this blog, we're arguing for 'intrinsics' as necessary (my challenge to Harvard is to get back to your heritage - the Puritans); and, we'll get to defining what we mean.

In the meantime, what Buffett shows, with his involvement in his investments, is just one type of intrinsic relationship. There are others.

By the way, folks, all this silliness is only a few decades old; it has no real theoretical substance behind it; and, we can nip the bud now to create a better financial world for us all.

Modified: 11/04/2010

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