Re: financial spiral of death



On Tue, 4 Dec 2007, Russell wrote:

On Dec 4, 10:15 am, Straydog <a...@xxxxxxxxx> wrote:
On Mon, 3 Dec 2007, Russell wrote:
On Dec 3, 7:46 pm, Straydog <a...@xxxxxxxxx> wrote:
On Mon, 3 Dec 2007, Russell wrote:
On Dec 3, 4:44 pm, Straydog <a...@xxxxxxxxx> wrote:
On Mon, 3 Dec 2007, Russell wrote:
On Dec 3, 10:31 am, Straydog <a...@xxxxxxxxx> wrote:
On Mon, 3 Dec 2007, Russell wrote:
On Dec 3, 3:20 am, morrisjc...@xxxxxxxxx wrote:
A derivatives insider chuckling.


some fraction _definitely_ are.

I was talking mostly about quants, not CEOs.

Well, since quants work (also or moreso) behind opacity, what can you
offer as explanations that what they do is more legal, more ethical,
more moral than CEOs?

Legal - scientists create subpar work, models, etc. all the
time without being arrested unless downright fraud is involved.

That's a fine CYA, but with opacity the quant is better protected than the
average grant-funded scientist with an open paper trail (patent aps, grant
aps, journal pubs) and in fact there are statutes on scientific misconduct
and adjudication offices are in NIH/NSF and they do "find" and "debar."

And in fact in many respects the work per se is probably
good to brilliant.

I'll defer to those who are qualified to judge, but ability to make
mountains of money do not prove that they are doing what they say they are
doing (but most people won't care unless they lose money and then there is
no recourse, anyway).

The Black-Scholes model got a Nobel Prize.

Granted I don't think it deserved it (and I'm not the only one),
but that's the fact nonetheless.

Hah! Did Al Gore deserve a Nobel prize for his movie?

Moral - N/A, unless you want to take the position that any
intellectual innovation that makes money from money is subject
to explicitly and strictly moral considerations.

I want to take the position that ANY process that makes money from money
and has "side-effects" where i) some people are helped and some people are
hurt, AND ii) there is more hurt than help, is a process that is bad for
society. And, I think you are well aware of enough of the shenanigans in
law offices and corporate offices to understand that what gets into the
newspapers is the tip of the iceberg.

That would

include the concept of interest on loans, which would put you
in good standing with the Muslim portion of society but quite
out of step with mainstream of Western thinking.

See above. The whole sub-prime fiasco is now unraveling and it was a
scheme that most people did not scrutinize and some articles I read
revealed that some people who signed their names on papers did not know
what they were signing and all this falls under a kind of "informed
consent" cloud. A good part of society operates on economic entrapment and
lots of details burried in fine print to actually inhibit you from even
thinking much about what you sign. To me, it really is a crime.

I agree, but the proper people to blame are not the quants.

Well, if you look way at the top, there is a quote about "a derivatives insider chuckling."

Let me quote another specific case where there were several WSJ articles that explained the details: the FBI infiltrated the Merc (Chicago) back a while and found rampant cheating. OK, they are not "quants." But, let me ask what is your evidence that they are not doing things (eg. "trading off their own accounts" and you have to read Martin Mayer's book "Stealing the Market" to understand what that means, but..) these guys are not supposed be doing (but there may be caveats).

It is like blaming a medical researcher who comes up with a
new potential drug which looks promising, gets tested and
approved, then reports start coming in of deadly side effects
at low but statistically significant rates, and the leadership
of the company doesn't report these right away because the new
drug is a cash cow.

And, it happens at a non-infinitesimal rate, too.

The researcher, in all likelihood, had no
idea that a small population would experience such side effects,
and moreover has no possible way of knowing that or of knowing
about the coverup. S/he are already looking for the next drug
or next grant to look for the next drug.

That researcher, according to a number of articles I've read or heard about, has a fairly high likelyhood of having published articles in the medical journals without fully disclosing financial connections with the contractee (eg. pharma funding) and this comes up in the medical journals to the point where the editors are screaming about it as a major problem.

Then, there are the contracts which the research signs where the source of the money has to give permission for the release of any information, and if its bad, it will never see the light of day.

....deleted stuff you didn't respond to....

Or, perhaps I should convey my mood in a context I thought you should
appreciate: i.e. the NSF "screaming" at the world about the vast shortage
of S&Es? Or, would you want to be "lets not be hasty to criminalize" what
the NSF is doing in this case, too?

I suspect the NSF is covered by the same laws that protect
Weather Service employees from being sued for a bad forecast.

I wonder if private weather service companies could get the same data and
do their own forcasts? And, if they are better, then lay off the NWS
forcasters and just provide the data to the private guys? ;-)

They do. All the NWS information is available, not only to
the private forecasters but pretty much all (maybe absolutely
all) of it is available to anyone with a Net connection and a
PC. Your tax dollars ate work. There is a law that gives the
NWS responsiblity for certain "official" forecasts, warnings
for dangerous weather, etc., while perserving certain other
forecasting activities (like forecasts for private companies,
commoditiy trading, a whole bunch of stuff I could list with a
bit of thinking) for the private companies. There is actually
a bit of lobbying on part of the private companies to push NWS
out of certain areas, for the obvious reason that they would
make a business out of it and we would have to pay them.

Ahah.... and maybe it would be even more expensive?

But, you can also buy satellite images now, too, and companies are using this service and its getting pretty big.

In
fact, that's the way it works in Europe. Here private citizens
can go to NWS websites and get most (if not quite all) any
weather or climate info for free. In Europe you have to pay,
and from what I understand it isn't cheap. BTW overall the
private forecasters are no better the Weather Service, although
they'll tell you thay are. :-)

Just like private industry likes to say they could do a better job servicing SS, Medicare, Medicaid, etc., and I'll bet money that the costs would go up (see Parenti's book "Democracy for the Few" for references to check).


Cheers,
Russell




Cheers,
Russell- Hide quoted text -

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