Economics and fairness

How many think that deals ought to be fair? Who is going to see that this is so?

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What if playing on the edge never has consequences for those who are doing the playing? Of course, someone pays; that's the nature of near-zero.

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In a case that's been going on from some time, the prosecution (elected and appointed) could not make anything stick to what seemed to be obvious shenanigans. Then, the accused, after being left off, pursued a claim that resulted in an eight-figure payout (for himself).

The news sources report that customers won't pay; no, it's coming out of monies set aside by the stock holders; yet, we know that the buck always goes down those who have the least power and the most to lose.

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Message here. How did this state of affairs come about? That is, how would we explain the idiocy to old Rip? The main oops: ah, that old siren of 'markets' and their seductiveness.

Necessary, yes. But, from a long view (we can give Warren that).

All the gaming (including shorts, derivatives, etc.) is not necessary; in fact, it's the chief culprit of our troubles.

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The chief enablers have been mis-used mathematics and computation.

Remarks:

10/10/2011 -- With the successful message coming out of the protests about Wall Street, evidently the number who cares is large.

08/12/2011 -- What about better 'accounting' of all this?

08/10/2011 -- One might ask: economics and legitimacy - weird stock market. Removes all arguments for the legitimacy/sustainability of this financial mechanism; that is, how ought this be done in a civilized, sane manner?

Modified: 10/10/2011

Best and brightest

Gosh, haven't we heard a lot of those folks lately?

If we start from first principles and re-visit issues related to smartness (or idiocy) and rewards (or not) thereof, a more solid view could be attained. The principles are varied and many (despite notions that we can start from the simple).

Here are some truisms offered in the sense of disclosure. Comparative analysis will always show that money is not as high in scale as many believe; it cannot be eaten (it can buy what we need to eat; it allows efforts at generating food to eat; so, it, its varied looks, and its theoretical basis have necessary functions). But, it's not just money, as many abstracted view are not really conducive to anything positive; of course, that we've excelled in abstract nonsense (used generally, but the specifics apply, too) since the turn of the 20th century (yes, 20th and little before) is one key factor to consider here. We could list a few of these.

This theme will continue across several posts.

That those with the algebraic talents can learn new ways does not give them any more stature than any other of the planet's inhabitants. It especially does not give them the right to foster means that are unstable in their pursuit of big pockets to the detriment of the hapless. Hopefully, the new day will see some of this addressed.

Note: That the Treasury is run by a New Yorker (Wall Street experience) means that we'll have to be more watchful. That the President was in Chicago for an extended period of time and not roped in by casino capitalism (CBOE, etc.) tells us something, to boot.

Remarks:

09/19/2013 -- To some, evidently, grabbing oodles of money, without due consideration of ramifications to others or to the common weal, is the smartest thing; but, we do know that virtue is smart, to boot. Even the secularists are trying hard to show how their worldview can lead to right living (as in, they do not need God to have a conscience). And, what virtue might be prime important to this discussion? Prudence (see Remarks, this day).

08/01/2013 -- Ben cannot unwind or taper down; he 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).

02/05/2012 -- Time to update this theme.

02/03/2011 -- This is a place holder, for now, for Lewis' article. The Irish people (where is the rage?) there were screwed over even more than the Americans. Now, one could argue oops; but, the truth is that certain minds need much more restraint than they are willing to admit. Unfortunately, other people bear the effects of these idiots (who, by the way, may, in many cases, test well - too bad there is not an effective arse test).

11/30/2010 -- Finance and pay, always problematic.

10/22/2010 -- We need more like Perelman in order to have a fair economy.

07/27/2010 -- The Boston Globe had an interesting op-ed, recently, about these types. Of course, there are several types, including the quants. We'll need to address this topic again using what we know of the new kings. Ah, such confidence when underdetermination reigns, especially when systems are the main tool.

01/27/2010 -- It's really ca-pital-sino.

11/30/2009 -- No one climbs above our neuropeptidergic limitations.

11/08/2009 -- The gigantic chimera needs proper attention.

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?).

09/24/2009 -- Things looking up for those who churn.

08/10/2009 -- As promised, FEDaerated is here.

08/02/2009 -- Wait! More exposures: "computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else's expense." To anyone who isn't at Goldman Sachs or the like, does that appeal to you as the way that we ought to be handling our beans?

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.

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.

06/20/2009 -- Yes, rent can go to labor (new look at capitalism), and finance can have a higher calling.

06/17/2009 -- A fresh look will be needed, including a newer look at the hapless.

Modified: 09/19/2013

I M F

Idiots managing finance? Joking! No, the IMF, as in International Monetary Fund.

These people oversee the global financial system and just picked up $.75T (thereabouts) at the recent G-20 for them to do globally something similar to the financial bailouts that we've seen in the US and EU.

Who are these guys, and gals, beyond a bunch of harpers who can go into a country and attempt to tell them how to run their economy? Many times these efforts had very unpleasant consequences for the citizenship. Must be nice to know so much as to run the world.

Note that the US is not a client. No, the US is a founder.

Well, Shelton (Gab Standard, et al) sees some issues (WSJ 04/27/2009) that bear to be noted. There is some pressure for another international currency, like a Euro for the world.

How would this be valued? That is, what new insights and knowledge would prevent those same types of things we see with the dollar and the American economy?

In terms of gold, the IMF has 12.9M ounces. How much is in Fort Knox? 147M ounces, or so.

What other approaches are there besides gold?

Remarks:

08/17/2009 -- As promised, FEDaerated is here.

08/10/2009 -- Near-zero will be looked at more closely.

Modified: 08/17/2009

Silly games

Earlier, crooked games was used for the thing called finance and business. What you have are the Madoffs and others who pilfer outside of legal boundaries; then, there is a larger amount of effort going into keeping the game going so that legal pilfering can occur.

Say, like we see with the AIG bonuses (except, multiplied countless times) which don't make sense since the company could have been bankrupt without taxpayer help. From whence, then, would have come the payout.

Then, you got those arguing for unregulated manipulations via derivatives and other types of mechanics. That is, their casino capitalism is in favor of their pocket bulging extracts. Give us a break.

That is, there are many players, some are on the floors of all those market sites, such as The Street, CBOE, and the like. Too many, don't you think?

But, the silliness goes further.

Ben talks; Pandit talks; someone else talks; what do we get? Little blips in the indexes, and people go crazy. Money pours into the game. Ah, the poor retiree; what gives with all these financially errant fund managers?

We're in the situation where the loss is 10-12 years deep. Many have had their lives ruined.

Yet, the gaming continues. The headline says that Obama wants more control over fianance. Well, kudos to him if he can get it. Some feel that we can't regulate the best-and-brightest. No, let's just let all of us reasonable people go down with the ship because of their failings.

But, why the use of 'silly' in the title? Well, certain illegal activities require real brain power. We all appreciate that, yet what a waste. Being led around zombie-like by the comings and goings of the financial market is just that, silly.

The fact that we'll have to address? It's near-zero sum, folks. Any who makes some gain takes it from others. And, as we have seen many times, the few take from the many.

Does it have to be that way? No.

Remarks:

05/28/2015 -- Perhaps, we'll get back to this (does it or doesn't it?) before the downturn comes about. Too, near zero needs attention.

01/15/2015 -- One of the most-read, of late, as things do look unsettling. Did we learn anything?

10/16/2014 -- We are now five-plus years past the time of this posts. A lot has changed; more has not (will it ever?). We are now to the point where the years of largess, and seat-of-the-pants flying by the Fed, will come home to roost. Now, just because there have been a string of down days does not mean that we have hit the point where descent trumps ascent (in other words, no timing of the market can be implied here). But, the WSJ has an article about one high frequency group. They talk their benefits provided, namely, liquidity, efficiency, etc. However, the whole bit behind the ca-pital-sino needs serious examination. And, silliness keeps coming to mind. ... And, we are not being anti-computation. However, if we are going to use advanced computing, let's do something real: like, track all sales (daily and longitudinally) - yes, openness. Why? Remove the cheshire multiple, for one. Remove the cream scrapers and pocket pickers from the game. ...  So much to discuss.

08/01/2013 -- We're relook at this as we consider the good side (as if there is one) of financial engineering.

02/05/2012 -- Time to update the theme of the best and brightest.

10/13/2011 -- This needs to be updated due to an emerging phenomenon: OWS.

04/03/2011 -- Need to look at some background. Too, tranche and trash.

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.

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?).

08/24/2009 -- 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.

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.

07/23/2009 -- After the bust and the rebound, toxic assets are still a problem due to tranche realities.

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.

06/17/2009 -- A fresh look will be needed.

05/18/2009 -- Oh yes, got us in a mess and still wants the bonus.

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

03/25/2009 -- Rhetoric can be fun, but we have to get into these issues with depth and technicalities.

Modified: 05/18/2015

Hedge Funds

As the Fed repairs the economy and the political leaders put out stimulants to get us all ga-ga again, we can look at particular financial areas more closely. Hedge funds, and the related oops (of which there are several types), will be an interesting start.

Yesterday, the WSJ reported how "ponzi" reportings seem to have proliferated after Madoff's revelations. Several factors can be thought of as contributors toward these being discovered. For example, people asking for their money can put strains on the scheme.

We could actually do the determination sooner, using techniques like truth engines. Actually, in Madoff's case, just asking the right questions would have worked; that is, following through further than just taking the guy's word. Collusion (story of an Irish hot dog banker, another poster boy) does come to mind as apropos.

In a sense, the madeoff/ponzi is the poor (non-rich, ok?) man's hedge fund. That is, the hedge funds screen out by the client's pocket's abundance and offer huge returns. So, that they get away with this (a future post will deal with the ethics and legitimacy of that whole game), including some outrageous practices (see below), sort of lets the non-rich person think that someone claiming to know how to get major returns (say, 48%) has to be legit. Didn't they hear similar about a hedge fund (ah, even Harvard bragging)?

Folks, do the hedge funds make any sense only in a culture of excess (other than helping the managers gather bucks)? That is, do we not have too many presses printing too much money? These funds were originally a method for those with an excess of accumulations (again, near-zero sum game, any big pocket, by necessity, is the result of milking oodles of the hapless -- It is encouraging to see empirical studies being done, such as UMass - Amherst).

Some of the characteristics of the hedge funds are bothersome. Take the opaque nature (please). Supposedly, it's to cloud their strategy. How many of these have been studied (see Hedge Fund Center)? I'm not talking just comparative results; that's a silly game. Too, these funds' public flogging of companies makes them like the taliban of business. For this, think about the video of a street in a city near Iran (you know the country) where some sharia law enforcers are holding down a guy in the street and going at it on his back for some infraction (judge, jury and executioner all rolled up into a roving band of thugs).

So, some have argued that hedge funds keep companies in line, the short-sell argument, in short. Oh, they're the conscience (dealing in rumours, see below) of the economy, so to speak? Sheesh, it would be more like a plague in a sense; what can these guys do that is constructive?

Consider this, the farmer helps us with eatables, the factory person provides us cars and planes, the landscaper cuts our grass, the doctor gives us our daily pills, ..., oh wait, those last two are services. In a sense, the hedge funds do provide a service but ought this be allowed in wild-west framework that they expect.

Again, consider this. We have social and legal constraints on various types of abuses. We are not allowed to exploit some person just because they are without power to stop us.

Well, hedge funds, in a sense, exploit little quirks in the economy (which is our body). If they were pure bottom-feeders, it would be okay (picking up exfoliates, etc.). But, no, their intent is to drive things. And, can we honestly say that, as a whole, they do any more than drive things into the ground?

As said, this is only a start of a series. And, I might add, that if some positive notion can be identified by this technique, I'll say so. What are the chances that the collection of things positive about hedge funds would outweigh their problematics? Well, that is one motivation here.

Remarks:

01/20/2013 -- Busyness (where is the sandbox?). The recent Business Week had something interesting article (Steven Cohen, of SAC Capital). Some employed in the business have misgivings about their ways of doing things. One talker, under questioning, was asked if he knew of any hedge fund that was clean, or above reproach using the old concept (as in, no shady dealings). No, he said. They could not survive, otherwise. It's like doping.

11/29/2011 -- Ah, Big Ben helped his friends more than he said, at the time.

05/17/2011 -- Hedge funds need some of our attention.

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?).

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

08/17/2009 -- As promised, FEDaerated is here.

04/17/2009 -- Minsky and the facts of ephemeral value are a couple of topics on the list.

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

01/30/2009 -- Hedge funds are about risk management, according to sanitized views, and may very well have a rational basis. Yet, various motives, which probably come out of the lack of control, seem to demonstrate that which Minsky tried to describe as the inevitable descent to a stench.

Modified: 01/20/2013

Lessons to be learned

Well, oops abound, as we can easily see. This year, we'll continue with the broader scope, yet find time for a focus on the plane program that is scheduled to fly its product this spring (2009).

Here are a few lessons to be learned, for starters.

• -- The WSJ tells us that civil contempt charges can lead to years in jail without trial. Say what? Yes, folks, in the good old US of A, it is possible to get into a situation that essentially requires you to prove your innocence to get out the clink. Can you see how that is opposite the usual approach to criminal justice? The crook can claim non guilt and require the prosecution to prove otherwise. We'll get more into this type of thing. Lessons: Happily, some states, such as Arizona, have put restraints on judges who do this type of thing. Such behavior reeks of hubris, does it not. As well, where do our rights come in?
  
• -- Harvard and others are crying poor now. Just a few months ago, some gloated at the returns going into their endowment funds that were the results of using leveraged techniques. Lessons: Hey, will they learn from this? Or will we, the taxpayers, have to bail them out?
• -- Why just pick on Harvard. Another fund's manager, this one dealing with pensions for hard-working public servants, cried that they need to do risky stuff to get their 8% returns. Lessons: Folks, when you hear this type of argument, think that it's a call for leveraging, by necessity. What it means is that someone doesn't want to pay up the proper basis for the future. Why don't we learn that we're dealing with a near-zero game? Any one who has expanding pockets is sucking it out of myriads more. That is, every winner maps to oodles of losers. Yet, that is argued as fair by many.
• -- Who's the daddy? Well, people thought that those who played the games were the brightest and smartest. Of course, we bailed out some highly paid people, if you folks recall. A recent report showed that Saudi Arabia can survive on an oil price of about $43 per barrel. Other countries need a much higher rate due to many factors, some of which involve leveraging. Lessons: Where is a lot of the Saudi money? US Treasuries. That the markets game needs a lot of attention; it is not the proper basis for an economy.

We'll continue in this vein for awhile, building up material for discussion.

The following are add-ons that will be coordinated with the seeds.

• -- Some think that there is a case for stock in building wealth. Perhaps, this could be true (or was) in certain senses. It is not categorically (refer to fund manager item above). For one thing, a gaming flavor has intensified with the computational support such that we do not know what is what at the end of any day. Okay, uncertainty is always something that we face. Lessons: Describe and discuss how this problem can be resolved. Also, look at how purely gaming schemes cannot be our future (not entirely).
• -- Value and froth are many times synonymous, it seems, in the realms of casino capitalism. Part of this is because financial engineering has no real basis. Lessons: Value is much more than what the market can address, and, yes, it is beyond mathematics, to boot.
  

Remarks:

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?).

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

07/14/2009 -- Looks like more than the finance guys need to learn something. Confounding ought to be left for safe games.

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

01/27/2009 -- Now a new day and way to consider these matters.

01/12/2009 -- Split out add-ons, which will grow for awhile.

01/11/2009 -- The tone changed above in a few areas in keeping with the Mission and Method. But do note that it says lessons to be learn, not lessons learned. We're dealing with open issues here.

Modified: 10/11/2009

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.

Remarks:

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

Leveraging and more

Yes, as we did with fiction and finance, we can also look at the oops related to leveraging. At one time, leveraging was consider not smart. Think of it, would you offer a large loan without any collateral (that you could verify in value) for some hair-brained scheme (how do you know how to evaluate the scheme? well, this is where skeptical thinking and experience come in).

So, in trying to catch up with the madness (having left school 30+ years ago and frankly not paying attention to the activities of idiots with money), reading like mad, watching results being analyzed (usually, the analysis was trifling and without substance), and considering how all this madness got started (related to age old issue, I know), on several occasions it was necessary to look at what it means to pile up debt.

As an aside, in Wichita, Hawker Beechcraft is loaded with debt from their split from Raytheon. The step of going IPO in order to spread the hurt, in little pieces, to others has not happened, yet. That whole game needs to be looked at, too. Hawker has a maintenance cost of 0.2B yearly; that must smart. No amount of belt-tightening or smart maneuvers can retire that level of debt. No, it requires the facilities of a market (who would want to buy?).

Leverage and truth -- March 25 . Looked at the underlying theoretics, which are usually fairly dismal in economics (the name fits perfectly). Ah, reinsurance is mentioned. Yes, didn't everyone think that risk was spread ad infinitum (Berkeley would love it!). And, then we have AIG, do we not?

Leverage and truth II -- March 31. Ah yes, the market dogma. It is touted by those whose pockets get lined immensely. Then, we have those who argue not zero-sum (hah!). What we'll have to do here is show that the best that we can do is near zero-sum.

Leverage and truth III -- May 19. Even by this time, I wasn't ready to accept all the idiotic changes to lessons from the 30s. We need to somehow make it clear that the CitiBank guy was wrong (Weill - well, he has his money) - Marx actually has a better take. Oh well.

Leveraging and oops -- May 19. So, we know that the financial community went out on the limb with leveraging. Do we not know that outsourcing (of certain varieties) is a type of leveraging? One problem with the engineering outsource is that of keeping it real (oops of this nature were coincidental to the start of this blog) and avoiding happy thinking. (Note 11/01/2008 - Well, now, Boeing is claiming insights about the possible banes of outsourcing.)

To the hilt -- August 19. Yes, like any addiction, the thing of going out on a limb grabs and does not allow one to let go. Evidently, to look at how smart people start to look like idiots. Of course, we really need to look at some physical binding (not gabbing) for money, that is other than a precious metal.

The idea here is to not just gab (that is the current basis) but to get technical and specific. After all, engineering computing handles similar issues, including the need to resolve several types of issues related to modeling, verification, and validation.

Oh, yes, the economy seems to be run like a real-time game. How do we get some notion of rigor applied? Well, it's not by chasing money.

Remarks:

05/30/2012 -- As covered by flightblogger.

05/04/2012 -- A recent filing relates to this theme.

04/03/2011 -- Need to look at some background. Too, tranche and trash.

03/17/2011 -- Politicos might actually be compounding the issues.

12/23/2010 -- Do oops continue to emerge?

07/23/2009 -- After the bust and the rebound, toxic assets are still a problem due to tranche realities.

12/18/2008 -- Leveraging, in and of itself, is not bad.

Modified: 05/30/2012

A new type of colonialism

Yes. Guess what it is? Globalization. Yes, it's to do in the doers, allow speculators to reign.

There have been many tos and fros throughout history and even before. Many of these involved nations, where the most recent was the treading upon souls that accompanied Europe's (and the US's) conquests, which were economically motivated.

Who is the new colonizer? Well, business with its global model. That we'll be going into. Modern business seems to think that it has labor colonized.

Busyness is noted for marching after the buck. That manifests itself with the few at the top accumulating hordes of money (say, like the guy who took $161M from his position atop a company that tanked).

Many like to argue that we're not dealing with zero-sum issues. Yes we are, folks. Call it, near-zero if you must. Any who gets big pockets takes it from other pockets.

So, not only do we have the new colonizer, there is little to motivate efforts at a common basis. What basis? Well, for the USers, that which is pointed out in the Declaration of Independence. Supposedly, the Constitution of the US guarantees some type of pursuit of well-being.

Notice, that well-being is not pocket lining of exorbitant proportions. No, there has to be better ways. One of these would be to constrain the situations (via a type of sandbox) where some play with the assets of the many ultimately leading to perditious states (pity the hapless).

Such as we are in now.

Remarks:

05/01/2012 -- Need to bring this up to date. For now, some pointers: Steve, Rank and file, Errors of Capitalism, ...

12/08/2009 -- Consider Paul and current CEOs.

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?).

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

06/15/2009 -- Globalization, and capitalism, now a dirty word, according to one in private equity.

01/18/2009 - We even need to look at why we need finance.

12/03/2008 -- We need to learn what we might be taught about money by Islamic Finance.

Modified: 05/01/2012

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).

Remarks:

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

Counting oops

David Wessel, of the WSJ, writes in Fannie, Freddie's Risks Exposed about the balance needed between privatization and nationalization. These two are examples of the abstractions that we love so much. If you would, these are 'dreams' that are problematic for realization, not like those things in engineering where actual production is possible.

So, what happened in the past decade is that a very much ideal approach to supporting home ownership was opened (but, not as a level playing field) to those who could not keep themselves from profiteering (which is related to Minsky's ponzi-ness). Along with this, another thing of beauty was besmirched, namely good old Sallie Mae. Several students who took loans found themselves wrapped by the python let loose by the privateers. These things are partly apropos in that Barack's vetting chief was one of those who interloped upon that space.

But, back to Wessel's comments, which are usually resonant with themes of 7oops7. The recent looks at Fannie and Freddie have resulted in recognition of their usefulness and in some appreciation for what might be done to control the Minsky inevitables.

So, how many oops are there to count in this regard? Well, those related to the program of initial interest pale by comparison.

Another example involves the Auction-Rate Security (ARS, see Wikipedia) which has trapped a few people. Again, from the WSJ (Holders of Auction-Rate Debt Have Choices, but Few Solutions), we can see some specific cases. One person asked where to part $375K for a few months in order to sort things out. Well, this investment idiot (UBS? you would think better of them) spouted that the ARS (was there some notion about the ARS being a cash equivalent?) was the place; essentially, the person has lost half the value. Naturally, claims for some type of damages are forthcoming. The article has a few other examples.

A lot of these things are understandable as many made oodles of money with problematic instruments for awhile and got lured in. It is very much true that proper accounting was not done; meaning, of course, accounting that would have shown the losers over this time (near zero-sum, folks - oh, that would be a God-eye's view? you might ask).

Gosh, the rating agencies adding junk on junk and getting something that didn't smell (or so they thought) just shows that mathematics has been mis-applied and reason pirated.

In this case, short-term CDs, even with the diminished rate due to Ben (thank you, guy), would have been preferred. But, various traditions of finance and mottled thinking says not.

Remarks:

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

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?).

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

01/27/2009 -- Lessons to be learned (as opposed to learnt), including, by necessity, Ponzi.

Modified: 11/04/2010

Gab standard

Or, should we say 'Gab as standard' which we do see a lot?

The title came from a WSJ opinion article but struck me as funny. Some earlier posts in this and the related blog talked about things like this. For instance, in finance we can look at the relative rankings of marking. Such as, is to model better than to market? Well, it turns out that it depends, like anything, upon who wins and who loses (it's near-zero, no matter what the richer and smarter say, folks). Of course, some have been marking to myth (Note to Cal Thomas: yes, we're in a 3rd-world dictatorship where the 'dictator' is not the 'decider' (whatever) but the group whose mindset is that their success is a divine-right and that their use of a gaming ontology, which is stacked in practice somewhat, is okay).

Too, on the engineering side, we can go on about 'gab' versus progress, where we know that the latter is hard to measure though it can be done. The former is always problematic, probably by necessity.

We also can look at the lowering dollar. How can this have come about when the US (Uncle Sam) talks (brags about) the 'capitalist' game? Well, we've talked about that, too, as mainly an issue more related to keeping the coffers of the few full. Turns out, though, that we've done so in the US using extracts from the pockets of many others. For how long can this be sustained?

Judy Shelton (see also Stable money) in the WSJ article (The Weak-Dollar Threat to World Order) looks at various reasons and the consequences of the current status. It's not pretty, folks. Anyway, the article is full of clever turns of phrase, such as things like "sleight-of-hand monetary policy" and like what we see with the title. In that case, the question is what is better, a gold standard (Note: 'gold' is being used since that was the standard [albeit erroneously] at one time; we could use anything, such as an element -- the key issue is what is a sustainable growth rate -- medical metaphors [morbidity, for one] may very well be apropos) or a gab standard? Some actually think that this is a foregone conclusion.

Oh, one sees that those who fell for the abstractionistic advances of the 20th century have really caused a lot of grief.

One case in point is that the supply-chain idea of globalization can fail in more ways than we've allowed ourselves to consider. Okay, we've seen both engineering and financial failings.

Now, let's look at agriculture. Has anyone ever thought about having a garden (or did so)? Seems almost to be a human right. Also, remember the idea behind the Victory Garden? Well, the World Bank and others have been telling others, of the developing mode, that they (the super rich) will supermarket-chain food to them. These countries were told not to have their own effort; consequently, many places cannot even do any type of sustenance farming in a reasonable fashion now.

What silly notions these are, all of this stuff. It has been 'rich' and supposedly smarter people telling everyone else what to do. Oh, I know, that's not new. It's just that technology and mathematics has allowed us to spread pain faster and further now.

See the WSJ for an article titled, Food Crisis Forces New Look at Farming. Makes one wonder what other ways the 'smart' set will be screwing it up for those who, in many cases, have no champion. By the way, of what is a CEO champion of?

There is a lot more to cover. It's interesting that the subprime problem has precipitated some of this review, yet that a whole house of cards has had such a very shaky basis portends what?

Remarks:

01/15/2015 -- One of the most-read, of late, as things do look unsettling. Did we learn anything?

06/23/2013 -- Ben sure has talked up (gabbed to) the investors; a recent downturn offers a lot to think about.

03/23/2012 -- Ben is doing a series of four lectures on his, and the FED's, role.

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.

08/17/2009 -- As promised, FEDaerated is here.

06/15/2009 -- Globalization, and capitalism, now a dirty word, according to one in private equity.

04/27/2009 -- The IMF who sits on a lot of gold got about $1T more to play with.

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

02/13/2009 -- Debate continues.

12/16/2008 -- Shoes continue to drop, but they are of several types.

10/20/2008 -- It got even worse throughout the year, from Ben's blink, through spitting in the face of savers, to bailouts (what?) of those touting capitalism.

07/31/2008 -- It's not enough to rant and spout off. So, let's start something constructive by looking at money and what it is.

Modified: 01/15/2015