Couple of days ago, I found myself in a rather nauseating meeting. I had highly anticipated the conversations that were to take place and had hopes of glancing into the workings of our asset and liability management department. What ensue though was just a recap of my junior class in high school. The topic under discussion was a new modeling technique that presumably would optimized our liquidity profile by analyzing the lifecycle of our demand deposits which the current model did not do.

I was shocked to hear this, that our current model was mainly just crap, but alright. Then the discussion moved forward and we all agreed that this would result in a more precise calculation of our liquidity coming from our core liabilities. Unforeseen though was the problem of explaining the process to business - the controllers of retail banking for example.

We came to a complete halt because of the fact that the managers in the meeting could not find a plausible way of explaining a simple ARIMA model for forecasting due to its 'complexity'. I really thought they were fucking kidding me. Juniors in high school brush over this type of modeling in a week's lesson yet the bank is unable to move forward an improved concept due to fear of the resources' inability to comprehend it.

One finds these situations constantly throughout the bank. A change is needed due to improved processes and new findings; yet the majority stands their grounds in defending old ideas and apprehensive about creating the new necessary adjustments in their processes or learning curve. Those, as I have advocated in the past, are one of the ways that the frailties of a large organization manifest itself. In spite of what is studied in Business School concerning "economies of scale", size hurts you not only at times of stress but at times of change.

There appear to be something with size that is harmful to corporations. Their longing for efficiency cause them to be blinded by these hidden risks. A project that is not useful for all is abandon at a whim in the name of the almighty 'efficiency', costing tens of millions of Euros. Yet they do not see that one problem somewhere could jeopardize the entire project -as the projects are weak just as their weakest links. It is as if their mental states harbors an ingrained model error. This nonlinear fragility will in no doubt be the end of this bank.

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Good old George stood up in a room full of people and said to some extent this: Ideas are just the things that go on in our minds. Perceptions, imagination, thoughts.

 Everyone seems to be on board with the suggestion that, you know, ideas couldn't exist without minds. Right? That seems straightforward, right? If no minds existed to perceive things, then how could anyone have ideas? If minds didn't exist, what would feel the sensation of getting burned? Nothing.

Okay. So, uh, why do people think that shit exists outside the mind, too? How does that even happen? That shit does not make sense. Here are the things that we know exist: the things we perceive.

 Here are the things we perceive: the things that there are. That's it! That's all there is! Want proof? Watch this: try to think of something that exists without existing in a mind somewhere. Got it? Good. Gotcha bitch. IT'S IN YOUR MIND oh snap you just got told.

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Life at Low Reynolds Number

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Some mathematical facts are true for no reason. They are accidental, lacking any cause or deeper meaning. This is an apparent attribute of any dynamical system which we try to model mathematically. And so are the facts of our chaotic environment which we call nature.

In our quest for understanding, we are becoming more and more aware of the complexity in seeking certainty in a world overladen with information. It isn't that there is too much information, it is the simple fact that we humans will never come to a point at understanding them.

Seeking patterns, forming algorithms and measuring their affects is a futile endeavor. Gödel's incompleteness theory, Shannon's mathematical theory of communication and Chaitin's path of incompleteness to chaos all show when observing the universe as is, it is impossible to come to an algorithm, a compression method or an encoding scheme to predict the next move or event.

Yet we humans are drawn to patterns willy-nilly. We invent elaborate tools and mind past data with a toothpick in order to predict and sniff out tendencies in the financial markets and social sciences so that we can make our next buck. Case:

Mirghaemi spent two years using Bayesian techniques to study how European bond markets responded to 3,077 separate releases of economic data between 2007 and 2008. She studied 1.6 million bond trades and figured out which pieces of news moved the markets more, and which ones analysts and traders were more likely to forecast poorly. "It made my eyesight like a double," she said. But Mirghaemi's research should now, in theory, allow traders, and trading algorithms, to position themselves better on an hour-by-hour basis. "It definitely makes money," she said.

How much information is really in 3,077 separate releases of economic data and 1.6 million bond trades ? These data, we could argue, are points in time, a sequence of events which had not been able to be predicted - hence her research. Can these sequence of events be truly random? Mathematically, it is impossible to prove that a number is random. So physicists and mathematicians alike have relied on proving the opposite: that a number or sequence of events N are interesting i.e. non-random by finding an algorithm for N.

Even though most positive integers are uninteresting (i.e. Random).., you can never be sure, you can never prove it---although there may be a finite number of exceptions. But you can only prove it in a small number of cases. So most positive integers are uninteresting or algorithmically incompressible, but you can almost never be sure in individual cases, even though it's overwhelmingly likely.

I can imagine one could try to prove that a data point is random by brute force, by implementing every known algorithm in a computer and test it against these data sets. But what you would get is algorithms testing other algorithms. A paradox.  A recursive self looping nut.

But we are drawn to these 1.6 million bond trades because they seem to not exhibit total randomness. If they were redundant, meaning all trades had the same attributes, we would again claim that no information exists amongst the numbers. As Shannon proved, information is surprise. It is when in a sequence of events where the next occurrence appears as a surprise that we find value and information.

The 1.6 million trades, this data set, is neither of these extremes: random nor redundant. Though, they indeed have information so this is the exact reason why we are meticulously trying to invent an algorithm which can be used to replicate its sequence. A futile undertaking.

For the problem is, we live in a nonlinear complex dynamical system and it is full of irrational agents - us. Finding a rational algorithm to predict an irrational dynamical system is like asking God to rigg the dice when there is no God.

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The confirmation that senior Haitian officials hold foreign nationality lends growing credence to a leading senator’s charge that Haitian President Michel Martelly is a U.S. citizen and hence illegally in power.

Two weeks ago, Sen. Moïse Jean Charles submitted what he called “irrefutable” evidence to a special Senate Select Committee that Martelly and 38 other high government officials hold dual, and sometimes triple, nationalities.

On Jan. 24, Sen. Joseph Lambert, the Commission’s president, announced in a press conference that the Commission has confirmed dual nationality for two of the 10 cases it has investigated to date. However, Lambert has so far refused to release the names of dual citizenship officials, saying his commission would proceed “impartially” and “without emotion.” He said arrangements have been made to continue the nationality investigations overseas.

The Senate inquiry threatens to create a political crisis which may force President Martelly, his Prime Minister Garry Conille, and other ministers to step down. If the charges against him prove true, it means that candidate Martelly lied to election officials about holding dual citizenship, which current Haitian law explicitly forbids for a high elected official.

Here is more.  There is the small matter of the Haitian constitution:

Commission member Sen. Steven Irvenson Benoît said that Haiti’s 1987 Constitution prohibits any foreign national not only from becoming president or prime minister, but also from acting as a minister or secretary of state. The Constitution’s Article 56 stipulates: “An alien may be expelled from the territory of the Republic if he becomes involved in the political life of the country, or in cases determined by law.“

Michel Martelly (“Sweet Mickey”) spent so much time in the United States, often giving concerts, that for years I simply assumed he held dual citizenship.  Until recently, I had not known about this provision of the Haitian constitution.  What is the old Haitian saying?:

“The constitution is paper, the bayonet is steel.”

Or something like that.

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It is not irrational to steadfastly hold the belief that, for example, your dreams have meaning or that the economies of the world are better off communistically despite contradicting evidences. Some men may go through life with the specific avoidance of any material that may contradict their beliefs. After all, when belief is of the nature of habit and the desired end of a mind, mental action on the subject comes to an end. This, argued Pierce, is one method of what he called belief fixation.

Let's distance ourselves from our beliefs for a moment to ponder his logical argument. I posted last time about the individualistic nature of men. My supposition rests though on no facts about the world, as individualism has no empirical merit. It is merely a generally accepted belief that has a wide acceptance as being reasonable. Does that make me right? Not so, to Pierce.

It makes my belief merely akin to a similarity that is comparable to taste. Taste, however, like fashion, comes and goes and no fixed agreement is ever reached. The argument follows then why not remove anything that is human in any matter or in an inquiry? We should aim to rid our beliefs from any human causal influences, continued Pierce. And that would be the scientific method. In more familiar language:

There are real things, whose characters are entirely independent of our opinions about them; those realities affect our senses according to regular laws, and, though our sensations are as different as our relations to the objects, yet, by taking advantage of the laws of perception, we can ascertain by reasoning how things really are, and any man, if he have sufficient experience and reason enough about it, will be led to the one true conclusion.

Assuming that there are no doubts about the existence of reality, his belief of the scientific method however contradicts his logic. His reasoning is as follows:

Everybody uses the scientific method about a great many things, and only ceases to use it when he does not know how to apply it. 4. Experience of the method has not led me to doubt it, but, on the contrary, scientific investigation has had the most wonderful triumphs in the way of settling opinion.

Has it really? His language of used clearly demonstrates the effects of contagious agreement. Like a taste, "'everybody' has made used of the scientific method" could merely be a fad. The scientific method may have settled a lot of opinions objectively but other methods have too settled matters within an enclave - here, if belief fixation is the primary objective regardless of contradictory evidences.

Should it thus be possible to have a method of testing the method? Or does it even make sense at all to restrict ourselves to a single method that defines our beliefs? Herein is Feyerabend's reductio ad absurdum which calls for the eradication of rules that govern epistemological methods. His laissez-faire approach of discovery liberates un- and learned men to venture with no predetermined processes.

He describes science as being obsess with its own mythology and emits an elitist and racist air to the point of being an oppressive ideology. Albeit, his proposal of anything goes for scientific progress radically shifts from the ordinary man's thinking yet it has been proven to be fundamentally important in shaping our perception of reality.

My supposition of individualism and including Pierce's position on the scientific method rests on no scientific reasoning yet this conclusive method, and others like it, of arriving to a belief provides us with a pluralistic approach at determining the truth. Siding with Feyerabend, we need not abide to a monistic methodological process when determining the truth. But what is the Truth?

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To aim at having an appropriate response, I will assume that by individualism you are referring to the meaning of individualism as "the pursuit of individual rather than common or collective interests; egoism."

What strikes me most in your writing is your unquestionable universalities of assumptions that an individual 'doe's not want to feel alone' and that 'one must care about another's life'. How do you know? And to what end? Being alone is relative and is merely an undesirability; an end of itself. Not being alone is based on contingent facts about your surrounding and the world, such as what would make us happy and it has no other motive than the "worthiness of being happy"; logically true as well for sadness. A definition of which that is well in line with the individualistic approach described above. Notwithstanding that it is also an individualistic act to smoke, to go to school, to marry - any act that enables you to pursuit your interests is individualistic. To share one's thoughts and emotions is not a contradictive act of an individualistic individual. In fact, it is egoistical.

Let us switch now to morality since your composition's apparent aim is to dwell on the hypothesis that an individualistic life 'isn't that bad'. Morality to me is subjective. In the modern world, we think of 'good' as meaning an act that is altruistic or just, or in Nietzsche's language 'unegoistic', and 'bad' as describing that which is cruel or unjust.

This, however, was not the original meaning of good and bad. For the early Greeks, the ones of whom Homer spoke, 'good' and 'bad' referred to different types of humanity. The nobility was 'good', as were the dispositions of character necessary to be noble and aristocratic, dispositions such as courage, strength and pride. 'Bad' referred to the 'herd', and to the characteristics of the masses, such as vulgarity, untruthfulness and cowardice.

But it is with Christianity, the distinction between 'good' and 'bad' became transmuted into that between 'good' and 'evil', a distinction primarily not between different kinds of characters or different forms of flourishing, but between divinely sanctioned and divinely forbidden behaviors. Let's take, for example, for some, the epitome of the modern world for altruistic deeds: Mother Teresa. She is an archetypical of an individualistic human. She believed that her divinely sanctioned acts would bring her closer to God and she thus canonized.

Christianity is driven not by a love of the poor and the dispossessed but by a rancorous hatred of nobility and strength. It has transformed us into morality slaves and has given us an external scapegoat of the pain that accompanies one's sense of personal inferiority. In the end, one needs to define what moral laws ought to be. However, no one has come up with an answer. Kant's categorical imperatives come close.

P.S.: To have control is an illusion.

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I've been told that Kant, Hegel and Kierkegaard were poor writers whose impenetrable prose style is incidental to their philosophy. I've also been told that their views are so profound as to defy expression in terms comprehensible even to smart, patient, well-educated people who are not specialists in the philosophy of the period. I've heard similar things about Laozi, Heidegger, Plotinus, Derrida. (I won't name any living philosophers.) I don't buy it.

Philosophy is not wordless profound insight. Philosophy is prose. Philosophy happens not in mystical moments, but in the creation of mundane sentences. It happens on the page, in the pen, through the keyboard, in dialogue with students and peers, and to some extent but only secondarily in private inner speech. If what exists on the page is not clear, the philosophy is not clear.

Philosophers, like all specialists, profit from a certain amount of jargon, but philosophy need not become a maze of jargon. If private jargon doesn't regularly touch down in comprehensible public meanings, one has produced not philosophy but merely a fog of words of indeterminate content. There are always gaps, confusions, indeterminacies, hidden assumptions, failures of clarity, even in great philosophical prose stylists like Hume, Nietzsche, and David Lewis. Thus, these philosophers present ample interpretative challenges. But the gaps, confusions, indeterminacies, hidden assumptions, and even to some extent the failures of clarity, are right there on the page, available to anyone who looks conscientiously for them, not shrouded in a general fog.

If a philosopher can convince the public to take him seriously -- or her, but let's say him -- being obfuscatory yields three illegitimate benefits: First, he intimidates the reader and by intimidation takes on a mantle of undeserved intellectual authority. Second, he disempowers potential critics by having a view of such indeterminate form that any criticism can be written off as based on a misinterpretation. Third, he exerts a fascination on the kind of reader who enjoys the puzzle-solving aspect of discovering meaning, thus drawing from that reader a level of attention that may not be merited by the quality of his ideas (though this third benefit may be offset by alienating readers with low tolerance for obfuscatory prose).

These philosophers exhibit a kind of intellectual authoritarianism, with themselves as the assumed authority whose words we must spend time puzzling out. And simultaneously they lack intellectual courage: the courage to make plain claims that could be proven wrong, supported by plain arguments that could be proven fallacious. These three features synergize: If a critic thinks she has finally located a sound criticism, she can be accused of failing to solve the interpretive puzzle of the philosopher's superior genius.

Few philosophers, I suspect, deliberately set out to be obfuscatory. But I am inclined to believe that some are attuned to its advantages as an effect of their prose style and for that reason make little effort to write comprehensibly. Perhaps they find their prose style shaped by audience responses: When they write clearly, they are dismissed or refuted; when they produce a fog of words that hint of profound meaning underneath, they earn praise. Perhaps thus they are themselves to some extent victims -- victims of a subculture, or circle of friends, or intended audience, that regards incomprehensibility as a sign of brilliance and so demands it in their heroes.

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Fifty is the smallest number that is the sum of two non-zero square numbers in two distinct ways: 50 = 1² + 7² = 5² + 5².^[1] It is also the sum of three squares, 50 = 3² + 4² + 5². It is a Harshad number.

There is no solution to the equation φ(x) = 50, making 50 a nontotient. Nor is there a solution to the equation x – φ(x) = 50, making 50 a noncototient.

The aliquot sum of 50 is 43 and its aliquot sequence is (50,43,1,0). Fifty is itself the aliquot sum of 40 and 94.

There is more here.

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Sometimes I am at awe of the amount of information that we have generated and stored. Many have postulated that as economic cost of storage exponentially decreased, we will perpetually expand the amount of information produced - an exponential increase of information over time. Its positive repercussions, however, are not easily observed.

Given our current level of environmental control, progress and information accessibility, I am quite baffled of how far some individuals can come to be able to operate within our given habitat without even having a minute level of apprehension or, at most, acknowledgement of its complexity.

We have teachers who can't perceive how a calculator function yet they are endowed with knowledge enrichment and distribution; dentists who can't describe how might an electric motor work yet everyday it is used in their drills and recommended as such as in an electric toothbrush.

Arguments of which that have enabled many to conclude that we have now reached an innovation plateau due to the overspecialization of our métiers. Where in the 19th century, a mathematician may have proven a theorem in her 20s, but now it must take her a decade more to accomplish an equivalent task. The theory is that there is much more material now to be learned and that requires a longer time to have successfully contributed to one's respective field.

Additionally, an innovators lifecycle tended to be more productive at a younger age as shared by von Neumann and many other eminent scientists and mathematicians. The sentiment is that the early years of the innovator are spent in training. Thus, the expanding time costs of education delay the onset of active innovative careers.

This possibility poses a problem for innovation as it reduces, ceteris paribus, the lifetime output of individual innovators, especially if their potential is greatest when young. It has also been proven that innovations in the past tended to occur when an individual crossed pollinated ideas across fields. These connections are not easily made in our current time, as the distance of knowledge within studies has widen.

Indeed, our repository of information may be exponentially on the rise. The question whether that will contribute to our knowledge augmentation is not a certain byproduct. This phenomenon may though undoubtedly increase the complexity of our environments. However, more and more information does not presuppose knowledge augmentation; most of these data bits will be just junk. Innovation has other uphills to overcome.

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no comment.

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From McSweeney's, In Which I Fix My Girlfriend's Grandparents' WiFi and Am Hailed as a Conquering Hero.

But then one gray morning did Internet Explorer 6 no longer load The Google. Refresh was clicked, again and again, but still did Internet Explorer 6 not load The Google. Perhaps The Google was broken, the people thought, but then The Yahoo too did not load. Nor did Hotmail. Nor USAToday.com. The land was thrown into panic. Internet Explorer 6 was minimized then maximized. The Compaq Presario was unplugged then plugged back in. The old mouse was brought out and plugged in beside the new mouse. Still, The Google did not load.

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From Robert Peston:

Perhaps more importantly, and at the risk of repeating myself, the downgrades increase the dependence of the big banks on finance from the European Central Bank – and for the economic recovery of the eurozone, that’s a very bad thing.

The less that banks are able to raise funds in a normal commercial way, the more they’re dependent on a central bank, the more reluctant they are to lend to the wider economy – and given the massive dependence of the eurozone economy on finance provided by banks, that leads to a reduction of economic activity, a reinforcement of recessionary conditions…

..the downgraded Italian and French governments would be seen to be less financially capable of bailing out Italian and French banks in a crisis, so other creditors would be shouldering more risk…

So even if the downgrades don’t lead to default by a nation or a bank, they make it much harder for the banks – and in a way the whole eurozone – to get off life support.

…That creates a damaging negative feedback loop (less lending means asset price falls, more bankruptcies, bigger losses for banks, and even less lending by capital-constrained banks) which makes it all the harder for the eurozone to break free of its cycle of decline.

And, as I said in my earlier note, the downgrades also make it harder for the eurozone to establish a proper circuit breaker – in the form of a giant bailout fund – to protect other sovereign creditors in the event that today’s impasse in Greek debt talks lead to a Greek default.

Here is a useful and only slightly overstated summary of where things stand:

The entire eurozone banking system can be seen to have been nationalised – or at least the funding of banks has been nationalised, even if their ownership hasn’t been transferred to taxpayers.

some comments from RBS.

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Suppose our minds have a hot state and a cool state. In the cool state we are rational and make calculated tradeoffs between immediate rewards and payoffs that require investment of time and effort. But when the hot state takes over we abandon deliberation and just react on instinct.

The hot state is there because there are circumstances where the stakes are too high and our calculations too slow or imperfect. You are being attacked by a hungry lion, the food in front of you smells funky, that bridge looks unstable. No matter how confident your cool head might be, the hot state grabs the wheel and forces you to do the safe thing.

Suppose all of that is true. What does that mean when a situation looks borderline and you see that instincts haven't taken over? Your cool, calculating head rationally infers that this must be a safer situation than it would otherwise appear. And you are therefore inclined to take more risks.

But then the hot state better step in on those borderline situations to stop you from taking those excessive risks. Except that now the borderline has moved a little bit toward the safe end. Now when the hot state doesn't take over it means its even more safe, etc.

And of course there is the mirror image of this problem where the hot state takes over to make sure you take an urgent risk. A potential mate is in front of you but the encounter has questionable implications for the future and the potential consequences are incomputable as so far as within the current situation. Physical attraction receives a multiplier. If it is not overwhelming then all of the warning signs are magnified.

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Happy new year.

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With.. Spalt, Hungary will have the most capable risk manager anyone can hope for. His experience and persistence are a guarantee that our subsidiary in Hungary will soon be seeing less risky times.

Can someone please ask this guy what in the world does he mean?

Can he really claim that one person - one person alone - with his stupendous skills at tackling risk, his immense foresight for intelligently deciphering future economic outcomes can lessen risks? I implore you to please see the bogus narrative in that quote above. Where are the watchdogs of critical thinking? Laughable.

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