Wall Street Math for Engineers

March 1, 2009 at 4:49 pm | Posted in Rants, Technology | Leave a comment

I recommend this fascinating Wired article on the mathematical background that led to the current financial crisis. Although I believe that mathematics is itself an abstract intellectual construct, when it is applied without any validation or confirmation to reality (as is done in engineering, physics, and as should have been done in finance), you are asking for trouble.

The financial “engineers” performed sensitivity analysis on the Cupola function itself, to see how small changes in the input data affected the price; they saw the results, and unlike real engineers (i.e. those not asked to put on their management hat), set them aside in denial.

New Sony Product

February 9, 2009 at 11:07 pm | Posted in Humor (G- and R- rated), Rants, Technology | Leave a comment

Sony has finally developed something even worse than trying to enter alphanumeric data on the PSP. I gave up on the PSP after connecting it to my wireless network and trying to use their web browser. If anyone can tell me how to enter a web address manually other than the default method, please comment below.

Censorship by Chrysler

January 25, 2009 at 1:16 am | Posted in Rants | Leave a comment

The Cluetrain Manifesto says that “markets are conversations”, and that requires that the company respond to their customers in an open manner, especially if you use a blog. Well, the clueless marketing droids at Chrysler posted a blog entry thanking America for their share of the bailout, and people responded by blasting the company for having the gall to thank people who had absolutely no say in the matter. Valuing public image over customer goodwill, Chrysler deleted the negative blog entries. However, censorship doesn’t work on the internet – here are the actual comments left by taxpayers.

Hey Chrysler – once you take government money, everyone is your customer, not just the ones buying your crappy cars.

The Ratchet Theory of Real Estate

January 21, 2009 at 9:38 pm | Posted in General, Rants | Leave a comment

A friend once said in 2005 that real estate prices, especially in California, would never go down a lot, since a “ratchet effect” would make homeowners stay in their homes rather than sell at a loss. The latest report from the California real estate market has home prices down 38% year-over-year and 49% during the last 20 months – people were losing 2.5% a month in home value. I believed that prices in 2005 could only be maintained by an appropriate rise in income, and that wasn’t happening. With the market collapse, tight credit, and rising unemployment, it will only get worse this year.

Two Million Jobs Lost

December 24, 2008 at 9:24 am | Posted in Politics, Rants | 3 Comments

Just as President Bush got two shoes as a parting gift from the Iraqi people, he has given an even worse parting gift to Americans – in the last four weeks, over two million people have lost their jobs. The sad part about this is that there is still one more month in his presidency. I estimate that between the time the economy started tanking earlier this year and Inauguration Day, at least six million people will have lost their jobs.

This is the Bush Legacy: Two Wars. Environmental Destruction. Economic Depression.

Worst. President. Ever.

The Origins of Employer-Provided Insurance

November 19, 2008 at 9:34 pm | Posted in Rants | Leave a comment

Malcolm Gladwell’s New Yorker article is an interesting look back at how employer-provided benefits like health insurance and retirement pensions started. Most people believe that unions demanded such benefits from the company; in reality, it was the companies themselves that pushed these benefits on their workers.

What employers in the 1940’s feared was not employee benefits per se, but rather the portability of those benefits at a time of low unemployment and rising wages. Unions at the time wanted portable insurance plans so that the risk can be spread out over as large a group as possible. Sixty years later, these company-provided benefits are part of the reason why the industrial economy of the Midwest declined and why the American auto industry is on the verge of collapse. Meanwhile, European countries rebuilding from the war took another path – the government provided benefits to help reduce the burden on companies trying to rebuild themselves. In retrospect, it looks like they made a better decision, at least in terms of preserving social stability.

Who’s Next?

October 9, 2008 at 8:38 pm | Posted in Rants | Leave a comment

I hope Morgan Stanley falls within the next few days. We will finally put the nail on the coffin of a rapacious company whose namesake started the Federal Reserve almost one hundred years ago.

Morgan Stanley

Falling Off a Cliff

September 17, 2008 at 11:12 pm | Posted in Rants | Leave a comment

All the recent stock collapses within the financial industry show a very similar trend – the shapes below for all the big companies that have collapsed all show a lack of transparency as management assures the public and their investors that all is well until they fall off a cliff. No transparency leads to no confidence leads to no capital. In some countries, this would put many of Wall Street’s titans on death row.

AIG

LEH

FNM

FRE

BSC

Another Day, Another Bailout

September 16, 2008 at 10:51 pm | Posted in Rants | Leave a comment

It doesn’t matter whether or not the government decides to pull a reverse Robin Hood – the end result is the same:

 Death to Lehman

Tomorrow will be AIGs turn. Burn baby burn!!

Line In The Sand

September 13, 2008 at 8:35 pm | Posted in Politics, Rants | Leave a comment

Many of the decisions that will be affecting Americans’ finances for the next decade or two are now being conducted on weekends behind closed doors instead of during business hours. It seems that every weekend, the government is in discussions on how to bail out the financial industry. Never mind that years of GOP mismanagement and a laissez-faire policy that eliminated regulations brought us to this point – it’s the fact that such help never arrived for the truly value-added industries in this country that could have used this kind of cash infusion – our manufacturing and energy industries. Things can only get worse as the government has become the last refuge of the corrupt robber barons of our age; the “moral hazard” that we have been warned against is here.

The above article says that the government is drawing a line in the sand regarding the possible rescue of Lehman, and that’s exactly the problem – they keep drawing the line further and further back.

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