Wednesday, May 25, 2011

Caveat Emptor

A few words are apropos in the context of truth and lemons.


We've all know about, or heard of, buyer's remorse. That is, you spend your hard-earned money on something and then wonder if it was junk that you bought. There have been ways to help with this: consumer protection laws, etc.

You see, though, the bankers did just that. That is, bought junk. Actually, sold junk, too. And, got away with it, almost. Why almost? They did crash the economy for which we are still paying while they have, essentially, been playing (with our money).

Any remorse on their part? Not that I can see. At the ex ante time, they were rolling the dough with glee. Luxury was almost synonymous with banking (investment type). In the ex post time, they've spent oodles of money (on lobbyists, for instance) and time on avoiding any notion of blame.

Now, the article mentioned in 'lemons' and 'truth' (both above) somewhat offers bankers an out. You see, they were moving the shells in an indiscernible manner while only being human. We should all know that bankers wallow; have you ever seen one that might be considered angelic?

Aside: talking those best-and-brightest who have been allowed to lead the old farts astray, not the laboring clerks, and lowly managers, who work to help the customer base.

Yes, all the while, gaming our beans and trying to appear, to the public, as if they knew about due diligence, fiduciary duty, and the like. Yet, behind the scenes, the depths of idiocy were being explored.


Aside: I agree with the FED dude in KC who wants to clamp down on banks and to put banking back into its utility framework. Too, I saw banking 'fraud' up close. Was actually thrown out of a bank since I could do mathematical modeling, noticed slight perturbations on their returns that suggested chicanery, brought it to the attention of management. The government? They said to take the banking company to court. What? An individual trying to do what ought to have been done by the OCC, the FDIC, or such? Too, the state banking association told me categorically that they were for the banks, not the customers. What, again? And, there were never any repercussions for the potential losses to that bank's customers who were not aware of the 'thumb on the scale' tactic. How much did the bank take in with their little scheme?

Aside: It's funny that the bank responded by throwing me, and my money, out; too, they did some character assassinations (or tried to) as if I were a harasser. When the machinations of Made-off (my ordeal was prior to this -- in summary: depositor, mainly - no debts) were revealed, what was brought out? Many had tried to tell the tale of his misdeeds. One even depicted the state of being alone and fearing legal repercussions. My motivations for 'truth engineering' are deep (long association with computing) and wide (everywhere dense).

Aside: Not anti-banking. I deal with several. Financial advisers? That's another story.

Aside: The bank also got back at me by taking TARP money which, we all know, came out of the taxpayers' pockets. Why did not TARP have strings?


Essentially, there are serious issues to resolve with computing and finance. To date, those in charge have let the young people run, almost without restraint, after riches and glories. Some have hit things big time (and, we get freebies, like blogger, for instance). Many more (a very many more) have become impoverished with the new types of 'gaming' that resulted in the ca-pital-sino.

Now, the authorities can blubber all they want about legalities, and such, and the law-makers can listen to as many of the lobbyists as they want (by the way, these people do not want us to think about these underlying, systemic, problems), but malfeasance seems to have become an acceptable mode (what did one headline say today? John Edwards, mis-used campaign money and hid it -- the adage? mis-use was not the issue, covering up is -- what a state of affairs!).

So, to make this short, for now, here are some things with which we will need to concern ourselves:
  • -- mathematization does not equate to truth - nor, does computation -- we will have to work to build a framework that is sustainable, and does not do harm (nod to those behind this medium). We cannot let those who can spawn off all of these awful instruments that have unknown consequences to continue to do so willy nilly. A sandbox would help. But, what exactly is that?
  • -- just as the prior bullet suggests, we cannot let pseudo-science reign in finance, and economics. We need to make it real. Of course, many have said that. For one thing, we could expect some type of 'testing' (no, not what Timmy did last year) within our money realm that is more solid than what we have now. Of course, that has implications on the bean counting, to boot.
  • -- following up on the prior bullet requires me to note that the 'pseudo' is partly tongue-in-cheek, due to the dismal nature of the domains. Oh, of course, those who roll in the dough (a very small percentage) may not be dismal. The reality is, folks, that for the most, the dire situation does not have to be, in many cases. True, there are natural disasters, accidents, and such. Yet, the type of things where a few, because they can, risk the livelihood, and the health, of the many need to scrutinized. Where that is not being done is with those things computational, for a variety of reasons. Some of it is pure laziness (ah, it's too difficult) and hubris (what? you expect me to dirty my hands?).
  • -- ..., doing what might be consider a flip-flop, we ought to encourage 'open' methods in computing and software. However, there is a big potential for hidden 'snakes' (find the article about this - that is, altered electronics that can be controlled remotely, embedded within something that is widely distributed) on the hardware/firmware side. Too, even with open software, there are issues, such as understanding how code works, is executed, and such. Then, algorithms are not necessarily grasped correctly.
  • -- So, we will be back to using computing, and networks, to found the truth, albeit augmented with devices everywhere in the hands of trained minds who are not afraid to recognize the importance, and use, of intuition (what? - being mindful of the map-territory silliness).
  • -- And, we'll have to put insurance back into its proper state -- not where some dude, at the top, pulls in 100+ million, for himself, in one year, by not doing things: paying claims, etc. After all, 'lemons' can be insured against, AIG's little (actually large) turmoils notwithstanding.
  • -- ...

05/29/2011 -- Fair dealing, can that be brought back? Was it ever?

05/26/2011 -- Quoted 'fraud' as will carry this discussion over to Fedaerated in a continuing discussion of banking, money, etc. Along the line of truth & lemons (context of the post), how do we discern the truth when mathematics/computation are involved? There are serious issues that have not been given enough attention, probably due to the operational effectiveness that we have seen. Too, there are human issues. Auditors are cut from the same cloth as the bankers, in many cases. Politicos are limited many ways. Somehow, we need to introduce independent reviews, beyond the oversight attempts by regulators. We'll closely look at this case of a bank throwing me out after I had been a good customer for 10 years. What changed? New management came in, an expansive mode went into effect (buying banks at other locales), and some operational changes were put into place to put the balance toward the bank (this is a key issue). At that time, returns started to diverge from the expected. Another factor is that it was not just me computing and checking one bank. I was comparing this bank's results against three others. Of the four, one bank's results were right on target with my expected return calculations (as in, mind you, zero deviation). The other two had slight residues, but that is to be expected given that one can interpret regulations several ways and still remain compliant. The bank out of which I was catapulted had deltas, in their favor, that were significant. We'll explain why and discuss why this was so. And, do it all in a nice manner despite a growing awareness that bankers are not upright (to wit, dead peasant - classy, indeed).

Modified: 05/29/2011

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