Ain’t Misbehavioral

No kidding, I received an abstract of this paper in an email newsletter recently: Effect of wind on stock market returns: evidence from European markets …………… Applied Financial Economics, 2009, vol. 19, issue 11, pages 893-904 Abstract: Environmental psychology studies have found evidence that wind speed has a strong influence on mood and comfort. This […]

My Own Private Stimulus

I don’t want a fancy stereo. I don’t want a Tivo. I don’t even want a Kindle (very much). The only consumer fetish I have is for laptops to write on and smartphones that help me maintain the sense of being organized — all other technology leaves me fairly cold. So, for several months now, […]

On How We Got Here

Every morning I wake up and look at Yahoo Finance and then open the front door and pick up the NY Times and the Wall Street Journal. And then sometimes I get mildly indignant at the news.The more I try to look at what’s happened the past two years, the more I realize that everyone has their own version of history. And, belatedly, I realize how difficult the writing of history must be, trying to figure out how society progressed from an earlier time to a later time, or from then to now. History is only a plausible story that everyone comes to accept as the more or less canonical version. I’m not a relativist, but with regard to cause and effect in human affairs, there is no provably “correct” explanation and there is no proof. Every path to the present has many possible trajectories that got there, maybe even parallel ones, as in the path integral formulation of quantum mechanics.

Third Willed

I was reading Yahoo Finance and came across the following Associated Press release:

“Democrats are looking for a way to respond to the public’s outrage over taxpayer money being used to bankroll big bonuses for financial executives without alienating an industry whose cooperation is crucial to the nation’s economic recovery.The House Financial Services Committee planned to endorse on Thursday a bill that would let Treasury Secretary Timothy Geithner and financial regulators decide whether an institution was spending too much money rewarding its employees.

The $elfish Djinn

Recently I heard a bunch of 1960s professors at Columbia participate in a panel about whether Marxism is still relevant today. One of them pointed out what he perceived as the spontaneous energy of capitalism, how it always seeks to find a way past obstacles, no matter what. Though he said it admiringly, he didn’t mean it in a totally good sense.

Hot Shots and Pot Shots

Everyone has his own model of appropriate behavior. My nemesis is people who think their model is right, not just for themselves but for everyone else too, and have no compunction telling you so. Many of them have standards that change with time, sometimes by 180 degrees, but their certainty that you should be following their current set of standards doesn’t.No doubt I am guilty of the same crimes, but …

A few posts ago, tired of reading about how the world would be better off if the financial engineers of the world did real engineering and put their brains to better use, in a vain attempt to divert attention I wrote: There may be too many financial engineers. There are certainly way too many MBAs and economists.

Forest Fires

You can’t do Monte Carlo simulations on history because you don’t know the laws of evolution, so anything anyone says is simply unsubstantiated theory. Nevertheless, here’s mine. The S&P 500 has now fallen from 1580 to the high 600s, down 57% and counting, despite intervention and cheerleading. If, instead, we’d let the market have its […]

The Hollercaust

I like to think I’ve been as good as almost anyone in pointing out the limitations of financial models. I can trace my first published article about so-called model risk to no later than early 1996. If you google “financial model risk” several of the first links that come up refer to that article. I say this in order to justify my attempt below to dampen the tendency to say wilder and wilder things in what are in some ways, but not all ways, desperate times.

Someone pointed me to a speech by Paul Volcker in which he says:

Unpredictable Inevitability

I recently watched a TV production of Un Ballo de Regina, a Balanchine ballet set to music by Verdi, and I had this strange sensation you sometimes get when you listen to music you’ve never heard before: every successive note seemed to be just what you thought it was going to be, and yet, to be honest, you couldn’t quite predict it. There was something both inevitable and yet unpredictable about what came next, but it was deceptive because you couldn’t have foreseen it, though it sounded like it had to be. You weren’t the composer and yet you had the illusion you might have been. I suspect this has something to do with the nature of Time and why music can keep you in the present and temporarily evade the future. You have to be unconscious and yet still in control enough to watch your unconsciousness to evade Time in a meaningful way.

Which brings me to the bailout.

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