Well, it's been long enough for the wags to start their summaries, such as this WSJ perspective (and more). Too, the rhetoric is settling down. We have a new budget that will set the stage for changing the future. The pundits will keep themselves, and some of us, busy.
It is interesting that Mr. Obama spent time, and worked, in Chicago but does not seem to have been taken in by the notions out of that town, such as casino capitalism (CBOE, in particular, if you wonder).
The issue of equity or not is still open to discussion. So what that there had been growth in the market, for some (and, I might add, exorbitantly so); too, there had been the growing of the gaming ways, as if that were necessary.
Remarks:
10/10/2013 -- Ben is leaving (did he get called out?); Janet is stepping up to the plate. Will Janet bring a new game?
01/07/2010 -- Ah, the ideologies of capitalism.
09/26/2009 -- Lots of opinion and uncertainty.
03/25/2009 -- Rhetoric can be fun, but we have to get into these issues with depth and technicalities.
03/01/2009 -- Poster boys, et al, motivate.
Modified: 10/10/2013
Saturday, February 28, 2009
Wednesday, February 18, 2009
Securitization
One might describe this whole discipline of securitization as wanting 'something from nothing' (not unlike efforts at perpetual motion) as the absence of a basis to understand the essential control issues leads to gaming and messes, much like we see now. The natural metaphors, that are founded in the sciences, only have a tenuous use. The computer? It's mainly led us down a path to perdition.
This whole game starts with money (in more than the modern senses) which can be stable but, by choice, is not. The physical basis for money does not have to be something of historic value. That we have not explored these other techniques more fully is because of entrenchment, not unlike the Big 3's delay in considering options for other types of vehicles.
Then, there is a whole series of instabilities added in modern finance via derivatives and processes that do not allow the full amount of bookkeeping that is required. That the current mess was precipitated by the sub-prime problem is basically coincidental. The house of cards would have fallen for some other reason eventually.
We'll be looking at all this more fully.
Remarks:
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.
08/17/2009 -- 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 -- 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.
05/27/2009 -- That we have topsy-turvy needs to be addressed more fully in both an epistemologic and an operational sense.
04/17/2009 -- Minsky and the facts of ephemeral value are a couple of topics on the list.
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.
03/25/2009 -- Rhetoric can be fun, but we have to get into these issues with depth and technicalities.
02/27/2009 -- There are many aspects and viewpoints and issues related to finance. It's too bad that the experimentation must be done on the fly. Many lessons are still to be learned.
02/18/2009 -- Actually, that financial engineering looks to the real engineering and the sciences is right on. That is, there are natural analogs for the market and other activity; yet, the work is half-way, at best; it is not sufficient to try to use physics, or even biology. Why? It's a topsy-turvy thing that will require us to establish and use a mathematics (to be discussed further). Of course, bayesian and other adaptive methods are not a bad start or a waste of effort. Yes, the computer will be central. See Truth Engineering.
Modified: 08/01/2013
This whole game starts with money (in more than the modern senses) which can be stable but, by choice, is not. The physical basis for money does not have to be something of historic value. That we have not explored these other techniques more fully is because of entrenchment, not unlike the Big 3's delay in considering options for other types of vehicles.
Then, there is a whole series of instabilities added in modern finance via derivatives and processes that do not allow the full amount of bookkeeping that is required. That the current mess was precipitated by the sub-prime problem is basically coincidental. The house of cards would have fallen for some other reason eventually.
We'll be looking at all this more fully.
Remarks:
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.
08/17/2009 -- 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 -- 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.
05/27/2009 -- That we have topsy-turvy needs to be addressed more fully in both an epistemologic and an operational sense.
04/17/2009 -- Minsky and the facts of ephemeral value are a couple of topics on the list.
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.
03/25/2009 -- Rhetoric can be fun, but we have to get into these issues with depth and technicalities.
02/27/2009 -- There are many aspects and viewpoints and issues related to finance. It's too bad that the experimentation must be done on the fly. Many lessons are still to be learned.
02/18/2009 -- Actually, that financial engineering looks to the real engineering and the sciences is right on. That is, there are natural analogs for the market and other activity; yet, the work is half-way, at best; it is not sufficient to try to use physics, or even biology. Why? It's a topsy-turvy thing that will require us to establish and use a mathematics (to be discussed further). Of course, bayesian and other adaptive methods are not a bad start or a waste of effort. Yes, the computer will be central. See Truth Engineering.
Modified: 08/01/2013
Friday, February 13, 2009
The times
The WSJ has been good about offering analysis about the current mess, its etiology, and the ways and means for resolving such. The opinion articles are open to public view and worthy of comment.
Remarks:
08/26/2023 -- Image wander off. Got it back.
- -- Wall Street Mocked American Values, 2/11/2009. We have to appreciate Frank's overview here, reminding us that Goldman Sachs had a very high payout in 2006. A few months later (okay, a couple of years), they were at our door (taxpayers) looking for bailouts. Sheesh. Too, we're reminded that Thain took home $6M for running one of the markets. Poster boy, indeed.
- --- Capitalism Needs a Sound-Money Foundation, 2/12/2009. A continuation of Shelton's arguments against the gab-standard and for stable money. This is so foundational that it'll continue to be of interest.
- -- How Government Created the Financial Crisis, 2/9/2009. Taylor's look at the mess and how Ben and others exacerbated the problems.
Remarks:
08/26/2023 -- Image wander off. Got it back.
07/22/2015 -- Some of these are, now, poster boys.
06/23/2013 -- Ben sure has talked up (gabbed to) the investors; a recent downturn offers a lot to think about.
10/22/2012 -- Finally, we hear from 60 minutes. There is a bigger issue: are these binding shut-up policies (always in favor of the employer) constitutional?
01/03/2011 -- Ah yes, now there are demands. The question remains: what growth other than the pockets of these types?
06/23/2013 -- Ben sure has talked up (gabbed to) the investors; a recent downturn offers a lot to think about.
10/22/2012 -- Finally, we hear from 60 minutes. There is a bigger issue: are these binding shut-up policies (always in favor of the employer) constitutional?
08/13/2011 -- Banks still struggling. We could have taken them over.
01/03/2011 -- Ah yes, now there are demands. The question remains: what growth other than the pockets of these types?
04/17/2009 -- Minsky and the facts of ephemeral value are a couple of topics on the list.
Modified 08/26/2023
Modified 08/26/2023
Tuesday, February 3, 2009
The debates
The debates (example) about capitalism (here, the libertarian ideology seems to come to fore, though, note that libertarianism can be enlightened) and socialism (here, the purported autocratic , or perhaps only authoritarian, tendency arises) rage forever in the western mind. Yet, we find ourselves now bailing out the socialistic fat cats of capitalism (Thain, another poster boy -- who would have believed that on the Republican watch, such largess with taxpayer money would ensue?). What gives in all this mess?
Well, it's time to look at something that can change the perspective, such as looking more closely at the Islamic take on these matters. Some insight might come from looking at Iran. It's Islamic but sufficiently away from Arabia to have interesting twists. A recent New Yorker article introduces the ideas of an economist in Teheran, Mohammad Tabibian. He talks of going to Qom to talk to the spiritual leaders who, by the way, are humble in characters, poor in acquisitions, and consideration of their human fellows. They are not inhabiting gold palaces as we see in some western situations.
But, they, from a spiritual sense as there is more attention to the 'other' world, don't really have an economic plan there in Qom. Hence, post the 1979 change-over in Teheran, the regimes have had to expend efforts to develop the necessary economic prowess. It would be interesting to see some more in-depth analysis, comparative to our stumblings over the past 200 years.
But, Tabibian, who is not favored in Iran due to his free market leanings, sees the need to encourage innovation as one thing that capitalism can do (yes, wouldn't it be nice to be able to do this with exhorbitant pocket linings - reminder, any pocket that fills, empties others - usually a many to one phenomenon). Why is not the socialist (at least, the communist experiment) view useful? Well, Tabibian was able to look closely at East Germany's economy, and, as a fellow revolutionary, could do so without censure. However, note that he had already been influenced by the western view.
As, he did study here in the west before he went back to Iran. So he can talk about the problems with the command economy (see the Trabant and much more) in comparative terms that are more meaningful than not. For example, he can talk about the problematics of the top-down specification of things versus the markets' approach that is, supposedly, bottom-up.
Isn't it the case that companies are more top-down now than ever before? What happened to worker empowerment? What we see is that people don't really matter here (western economy) except as resources to be exploited); one reason is that the 'other' influence has been filtered out.
Our recent turmoils from the disintegration of that Wall Street hubris show us the problems related to the 'free' ideology. In the western world, the reward for innovation has been seen as allowing enormous pocket filling to the detriment of the many. That is, smart means rich. But, do not the best-and-brightest (ah, yes, the favored) essentially corrupt the market's paradigm? Too, do they not screw it up for the rest of us?
One solution: monks as CEOs (who needs the preening of the elites?).
Yes, the suggestion is that the CEOs work from a vow of poverty (see Remarks) relative to their current expectation that they are the best and, divinely, chosen. It's the function that we want; these egos may have arisen to their positions by some talent that seems to hide under their avarice; let's propose that they just floated to the top (scum?) in the irrationalities that have run amok the past couple of decades.
So, our task? Define what might be the qualities that would be truly beneficial to all concerned (isn't that the ideal - meaning, of course, shareholders, customers, employees - what can BofA show its customer? no much, according to some). Among these attributes would not be the excessive drive for accumulation (those socialpathic tendencies ought to cause a filtering - are boards mere sustainers of elitism?).
This theme will re-occur.
Remarks:
07/17/2009 -- China has eaten our lunch (and dinner). Shows how silly our games are. Yet, finance can be run by people who can be non-profit in scope and who have an impeccable (oh, what quaintness!) un-interest in money.
03/30/2009 -- Near-zero will be looked at more closely.
03/11/2009 -- We also need to look at accounting's role messing up affairs.
02/05/2009 -- Of course, Iran is only one of many Islamic examples that we can (ought to) study; especially, as on this side of the world, the likes of the poster boys, who want their big pay and fast jets, even when they are on the dole, seem to prevail. Why do we allow such idiocy?
Too, Iran can be thought of as being about 30 years old. So, they've stumbled. The USA has been perfect over 200 years (e.g. Mining in Colorado)? Obama says that we do not disparage wealth on this side of the planet. Well, no wealth has been accumulated without others (the endless hapless) being diminished. Near-zero is the reality, folks.
Also, equity and debt are not equivalent when looked at correctly. The former's mechanisms have evolved, unreasonably, into gambling. Some wanted the latter to be so influenced, to boot. But, these both could be tempered, by various means that are rationally, and naturally, supported.
Economics and finance have erred to the extent that they've abstracted, meaning misused mathematics. Let's get back to being real and more stable.
Modified: 07/17/2009
Well, it's time to look at something that can change the perspective, such as looking more closely at the Islamic take on these matters. Some insight might come from looking at Iran. It's Islamic but sufficiently away from Arabia to have interesting twists. A recent New Yorker article introduces the ideas of an economist in Teheran, Mohammad Tabibian. He talks of going to Qom to talk to the spiritual leaders who, by the way, are humble in characters, poor in acquisitions, and consideration of their human fellows. They are not inhabiting gold palaces as we see in some western situations.
But, they, from a spiritual sense as there is more attention to the 'other' world, don't really have an economic plan there in Qom. Hence, post the 1979 change-over in Teheran, the regimes have had to expend efforts to develop the necessary economic prowess. It would be interesting to see some more in-depth analysis, comparative to our stumblings over the past 200 years.
But, Tabibian, who is not favored in Iran due to his free market leanings, sees the need to encourage innovation as one thing that capitalism can do (yes, wouldn't it be nice to be able to do this with exhorbitant pocket linings - reminder, any pocket that fills, empties others - usually a many to one phenomenon). Why is not the socialist (at least, the communist experiment) view useful? Well, Tabibian was able to look closely at East Germany's economy, and, as a fellow revolutionary, could do so without censure. However, note that he had already been influenced by the western view.
As, he did study here in the west before he went back to Iran. So he can talk about the problems with the command economy (see the Trabant and much more) in comparative terms that are more meaningful than not. For example, he can talk about the problematics of the top-down specification of things versus the markets' approach that is, supposedly, bottom-up.
Isn't it the case that companies are more top-down now than ever before? What happened to worker empowerment? What we see is that people don't really matter here (western economy) except as resources to be exploited); one reason is that the 'other' influence has been filtered out.
Our recent turmoils from the disintegration of that Wall Street hubris show us the problems related to the 'free' ideology. In the western world, the reward for innovation has been seen as allowing enormous pocket filling to the detriment of the many. That is, smart means rich. But, do not the best-and-brightest (ah, yes, the favored) essentially corrupt the market's paradigm? Too, do they not screw it up for the rest of us?
One solution: monks as CEOs (who needs the preening of the elites?).
Yes, the suggestion is that the CEOs work from a vow of poverty (see Remarks) relative to their current expectation that they are the best and, divinely, chosen. It's the function that we want; these egos may have arisen to their positions by some talent that seems to hide under their avarice; let's propose that they just floated to the top (scum?) in the irrationalities that have run amok the past couple of decades.
So, our task? Define what might be the qualities that would be truly beneficial to all concerned (isn't that the ideal - meaning, of course, shareholders, customers, employees - what can BofA show its customer? no much, according to some). Among these attributes would not be the excessive drive for accumulation (those socialpathic tendencies ought to cause a filtering - are boards mere sustainers of elitism?).
This theme will re-occur.
Remarks:
07/17/2009 -- China has eaten our lunch (and dinner). Shows how silly our games are. Yet, finance can be run by people who can be non-profit in scope and who have an impeccable (oh, what quaintness!) un-interest in money.
03/30/2009 -- Near-zero will be looked at more closely.
03/11/2009 -- We also need to look at accounting's role messing up affairs.
02/05/2009 -- Of course, Iran is only one of many Islamic examples that we can (ought to) study; especially, as on this side of the world, the likes of the poster boys, who want their big pay and fast jets, even when they are on the dole, seem to prevail. Why do we allow such idiocy?
Too, Iran can be thought of as being about 30 years old. So, they've stumbled. The USA has been perfect over 200 years (e.g. Mining in Colorado)? Obama says that we do not disparage wealth on this side of the planet. Well, no wealth has been accumulated without others (the endless hapless) being diminished. Near-zero is the reality, folks.
Also, equity and debt are not equivalent when looked at correctly. The former's mechanisms have evolved, unreasonably, into gambling. Some wanted the latter to be so influenced, to boot. But, these both could be tempered, by various means that are rationally, and naturally, supported.
Economics and finance have erred to the extent that they've abstracted, meaning misused mathematics. Let's get back to being real and more stable.
Modified: 07/17/2009
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