Rolling US Economy Into The Shitbin Thread

lol efficient markets. ibankers certainly did and may still argue that the demand for growth and the risk of return would be linked and properly priced in the market. or they may now be bleating that sheepish refrain of more/better/smarter/ regulations + greater transparency idk. i think your right, actually - but those problems arent eliminated by delisting Deptford and Sharpman.

the argument as i understood it was more about preventing a loss of confidence from turning into a self-fulfilling prophecy which is some old knowledge probably maybe but it isnt always a wonderful life

Re low-info vs institutional investors 3 days ago: dichotomy possibly not altogether clearcut:

guys helming local government eg counties/municipalities/departements/communes/provinces with sometimes LOTS of funds to sink into vendors (yes) that might convince them things are safe & sound, while being only regular elected officials with barely any economics between them: low low info + at the same time pretty "institutional"?

thats a good point tho i still say the vast majority of institutional investors are typical high info insider financial types what w/yr mutual hedge pension and all other sorts of funds

id love to see a breakdown of all this shit and obv a lot of the time the low info and pro info people are in on it together

story of the financial crisis as told through one arizona shack http://online.wsj.com/article/SB123093614987850083.html

btw im so jealous of this lady for getting her v own wsj dot portrait

we're saved btw: http://www.nytimes.com/2009/01/03/business/economy/03econ.html?_r=1

FYI you can commission stipple portraits

yah i just found that - i prefer to earn mine tho

the wsj is weird it has some of the best reporting on markets and politics and a decent food column but then it was really weird and creepy articles like that one last week about why liberals hate the suburbs

the editorial board was taken over by supply-side wackjobs like forty years ago but otoh they have to compete with the FT

http://ibdeditorials.com/IMAGES/cartoons/toon010509.gif
http://ibdeditorials.com/IMAGES/CARTOONS/toon122908.gif

http://picayune.uclick.com/comics/gm/2008/gm081231.gif

shit, wrong thread

lil primer on the irish economy http://www.nytimes.com/2009/01/04/business/worldbusiness/04ireland.html

That deal amounted to 54 million euros an acre, one of the highest amounts ever paid for land in Europe. His subsequent architectural plan featured a soaring Dubai-like office tower cut in the shape of a diamond that anchored a futuristic community of expensive houses and glamorous shops, and the price tag of one billion euros shocked Dubliners with its gall and ambition.

dubailin

i hate my generation and everyone in it - http://www.economist.com/business/displayStory.cfm?story_id=12863573&source=hptextfeature

Charlotte Gardner, a 25-year-old Californian who was made redundant by a financial-services firm in November, has since been using online job and social-networking sites, as well as micro-blogging services such as Twitter, to promote her skills to potential employers. Ms Gardner, who is optimistic she will find another job soon, describes herself as “a glue kid” — someone who can get different kinds of people to work well together.

lol

the straw that stirs the drink, i'm sure...

its really just like the dotcom crash except so much worse

michael lewis on what happened http://www.nytimes.com/2009/01/04/opinion/04lewiseinhorn.html

and hoe to fix it http://www.nytimes.com/2009/01/04/opinion/04lewiseinhornb.html

david einhorn rules too I watched a youtube of him for give a talk for like 30 mins and am thinking about checking out his book

mr. einhorn certainly deserves the "LOL-ing up his sleeve" award for 2008 for his bulldogish stance on Lehman Bros. shame that the folks who mattered didn't pay him as much mind as they should've.

ya well for most of these dudes banking $100m was a more attractive proposition than being called smart after all fell down

frankly i would rather have $100m than be called smart

something kind of fucked up happened during my generation that becoming a federal civil servant seems almost like a punk rock thing to do

hahaha

of course, some federal civil servants see it as a backdoor route to scoring some mad cash later in life (particularly and not coincidentally with respect to gigs @ the SEC) -- so there are some billy idols sprinkled in with the ian mackayes in that punk rock scene.

worth a read:

http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?_r=1

Krugman today predicting grt depression II

I wouldn't say he's predicting as much as showing how it could happen

or how it will happen unless the democrats grow a goddamn spine from the stem cells of murdered babies

or how it will happen if republicans don't stop being little twerps

or how it will happen if republicans don't stop being little twerps

the laws of gravity will be repealed by God before that happens ... they were twerps during the 1930s as well (which Krugman has also written about).

i'm more worried about the "blue dog democrats" who will try to scuttle any Obama-led economic recovery package on the grounds of bloating the deficit and national debt. we can debate how much of that comes down to ideology or self-interest.

yeah those crazy people who worry that adding a trillion in deficit or debt, as if it could negatively affect our economic stability in the long term.

http://moreorlessbunk.files.wordpress.com/2008/01/hoover.jpeg
o hai don ;)

worth a read:

http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?_r=1

― Ed, Sunday, 4 January 2009 22:11 (Yesterday)

I came to my own conclusion at least several years ago, with no real background in economics or statistics or math, that mathematical risk models were probably mostly bunk. It only takes intuition to realize that it's not possible to model the unpredictable, that it's human nature to think a catastrophe is less likely than it really is, and that models are exactly the kind of thing that lull people into a false sense of security with their pseudo complexity. Sometimes I'm tempted to think that they were an outright fraud designed, or at least used, to convince naive investors that sophisticated tools were being used to manage their money. That's most of what Wall Street is really about.

Don where have you been with that attitude every time tax cuts have been proposed, eh? We could have used you!

Hurting I thought that article was fascinating but 1) the endless paragraphs about Mr Black Swan were pointless and irritating and 2) the defenders of VaR kind of have a point when they say it's a model for 95% or 99% of situations and actually it performed exactly as expected. This is a 1% situation we're dealing with and the fact that managers and executives didn't have plans for dealing with it has nothing to do with VaR itself. Of course if he'd said that in the beginning of the article he wouldn't have reached his 9000 words or whatever it was, and wouldn't have got to fawn over "NT" - as I call him. One last quibble with it - when you promise an anecdote it should be snappy and tellable in a pub. He takes two pages to get around to it.

http://www.motherjones.com/kevin-drum/Blog_WSJ_Retail_Bankruptcy.gif

I'm not sure letting this amount of businesses fail is going to do much for our long-term economic stability either.

I came to my own conclusion at least several years ago, with no real background in biology or zoology or chemistry, that evolutionary models were probably mostly bunk. It only takes intuition to realize that it's not possible to model the unpredictable, that nature can evolve organisms of incredible complexity spontaneously, and that models are exactly the kind of thing that lull people into a false sense of security with their pseudo science. Sometimes I'm tempted to think that they were an outright fraud designed, or at least used, to convince naive believers that sophisticated facts were being used to explicate God's creations. That's most of what "science" is really about.

Ritholtz has some things to say.

1) the endless paragraphs about Mr Black Swan were pointless and irritating and 2) the defenders of VaR kind of have a point when they say it's a model for 95% or 99% of situations and actually it performed exactly as expected. This is a 1% situation we're dealing with and the fact that managers and executives didn't have plans for dealing with it has nothing to do with VaR itself. Of course if he'd said that in the beginning of the article he wouldn't have reached his 9000 words or whatever it was, and wouldn't have got to fawn over "NT" - as I call him. One last quibble with it - when you promise an anecdote it should be snappy and tellable in a pub. He takes two pages to get around to it.

― Tracer Hand, Monday, January 5, 2009 10:13 AM (11 minutes ago) Bookmark

Yeah, agreed. TBH I got through about half the article and put it aside.

I came to my own conclusion at least several years ago, with no real background in biology or zoology or chemistry, that evolutionary models were probably mostly bunk. It only takes intuition to realize that it's not possible to model the unpredictable, that nature can evolve organisms of incredible complexity spontaneously, and that models are exactly the kind of thing that lull people into a false sense of security with their pseudo science. Sometimes I'm tempted to think that they were an outright fraud designed, or at least used, to convince naive believers that sophisticated facts were being used to explicate God's creations. That's most of what "science" is really about.

― Lamp, Monday, January 5, 2009 10:19 AM (8 minutes ago) Bookmark

Touche, I guess. But economics, unlike evolutionary theory, actually IS a pseudo-science.

We weren't talking of trillions of dollars of debt or deficits with tax cuts. The magnitude of proposed spending being bandied about is unprecedented. Oh, and yeah, Barry wants to cut $300B in taxes, so am I supposed to cheer for that? Okay, rah rah rah.

What worries some people is that in a frantic infusion of spending, money will not be carefully spent. And judging from TARP and Paulson's lying giveways, I'd say there's a reason to have healthy skepticism.

there were shitload of people who knew they were abusing these models but would rather hav $100m than get fired - im kinda w/the guy whos all u cant get mad at math - the whole situation is more of a regulatory failure than anything imo

which isnt to say the black swan argument isnt relevant or fascinating and can basically applied to everything cause it is and can - it was kinda lame how the author kept being all what abt the ONE% and then towards the end is all offhandedly of course they had models to deal w/the fat taild black swan

btw i saw black swan taleb on charlie rose recently and he was really unconvincing - not a v good speaker

i thought the article was pretty cool if not essential tho

that black swan dude is jerk when i was school i wrote an article questioning some of his stats work and he sent me the most condescending and assholish email about what and idito i was - this from someone that cant even fuck with bayesian analysis. maybe he is some kind of genious but fuk him.

that article annoyed me like CRAZY it had some retarded assumptions the first of them being that VaR is the be all and end all of risk modelling. my first job as lol 18 y.o. was working in risk mgmt and we were doing non-VaR modelling esp on swaps and hedges which lol credit derivatives. and i mean cmon my old bank never went bust and its not like we were all that brilliant we just had a more risk-adverse executive than the wall st. dudes. and when i left my job in 2006 we were writing reports about credit risk in part because some of the macro models had been red alerting for 18 months.

any model is only as good as the ppl using it. so this whole "they went with their gut!" thing is moronic. when the lehman hedge-fund managers "went with their gut" it meant ignorning advice from internal advisers, tweaking models to get more favourable results and just generally ignoring data due to greed. the market feels like an elaborate three card monte right now and plenty of ppl misjduged and mismanaged. the models WERE faulty but that's means that data-driven mgmt is worthless???

dude do u still hav the email post it here plz

lol i looked i dont have my school account anymore i might be on his website tho i think he has a section called "morons who dont get my towering intellect".

and look the post above is evidence that i'm an idiot dont get me wrong but if even i could tell that things were bad in 2006, enough that i even went out and changed careers, then i dont know if the models are the problem.