The False Dichotomy of Alternate Choices. False dilemma.
I cry a river over this.
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Showing posts with label Banking System. Show all posts
Showing posts with label Banking System. Show all posts
Monday, March 30, 2009
Geithner Plan: The False Dichotomy of Alternate Choices
Based on Meet the Press and This week interviews of Mr. Geithner, nobody at the the treasury seems to have seriously raised to the Secretary's attention, the possibility of a less costly, surgical, and more effective alternative through market making as I have advocated.
The False Dichotomy of Alternate Choices. False dilemma.
I cry a river over this.
The False Dichotomy of Alternate Choices. False dilemma.
I cry a river over this.
Monday, March 23, 2009
Op-Ed Columnist - Financial Policy Despair - NYTimes.com
Op-Ed Columnist - Financial Policy Despair - NYTimes.com
I could not agree more with Mr. Krugman on the sense of desperation over this plan.
I have cried a river over this, and over and over.
And I cry again...
However we arrive at the same conclusion from different analytic paths and our prescriptions differ. My analysis remains this
I could not agree more with Mr. Krugman on the sense of desperation over this plan.
I have cried a river over this, and over and over.
And I cry again...
However we arrive at the same conclusion from different analytic paths and our prescriptions differ. My analysis remains this
Sunday, March 22, 2009
Op-Ed Columnist - Are We Home Alone? - NYTimes.com
Op-Ed Columnist - Are We Home Alone? - NYTimes.com: "And you will ensure that we’ll never get out of this banking crisis, because the solution depends on getting private money funds to team up with the government to buy up toxic assets — and fund managers are growing terrified of any collaboration with government."
Huh!...
My only quarrel with the article is the apparent assumption that the plan the government appears to be poised to announce is the obviously best and only game in town...
Once more, Mr. Friedman, would you read this?
Huh!...
My only quarrel with the article is the apparent assumption that the plan the government appears to be poised to announce is the obviously best and only game in town...
Once more, Mr. Friedman, would you read this?
Saturday, March 21, 2009
Toxic Asset Plan Foresees Big Subsidies for Investors - NYTimes.com
Toxic Asset Plan Foresees Big Subsidies for Investors - NYTimes.com
Moronic disgrace.
Design complexity here is no substitute for discernment.
I cry a river over this.
See: http://knol.google.com/k/phil-kongtcheu/fair-value-pricing-government-market/
Moronic disgrace.
Design complexity here is no substitute for discernment.
I cry a river over this.
See: http://knol.google.com/k/phil-kongtcheu/fair-value-pricing-government-market/
Thursday, March 19, 2009
Fed Will Inject $1 Trillion More Into the Economy - NYTimes.com
Fed Will Inject $1 Trillion More Into the Economy - NYTimes.com
Not bad. But I think a but in a more structurally efficient way, the fed would expend less and achieve the goal of curbing long term rates if it made markets on overnight functional notionals BICs-FRAs along the term structure. Since this would recompose into long term bonds without immediately disbursing the cash needed to purchase long term bonds, it would use less capital.
In 2005 when the fed was desperately trying to raise long term rates to dampen speculation on mortgages, but considering it prohibitively expensive to get into the business of selling long term bonds, I volunteered a piece to the NYT and WSJ explaining how BICs might help do this efficiently. No one was interested.
Still, policy makers have not figured this one out...What else can I do?
Not bad. But I think a but in a more structurally efficient way, the fed would expend less and achieve the goal of curbing long term rates if it made markets on overnight functional notionals BICs-FRAs along the term structure. Since this would recompose into long term bonds without immediately disbursing the cash needed to purchase long term bonds, it would use less capital.
In 2005 when the fed was desperately trying to raise long term rates to dampen speculation on mortgages, but considering it prohibitively expensive to get into the business of selling long term bonds, I volunteered a piece to the NYT and WSJ explaining how BICs might help do this efficiently. No one was interested.
Still, policy makers have not figured this one out...What else can I do?
Sunday, March 15, 2009
TALF Is Reworked After Investors Balk - WSJ.com
TALF Is Reworked After Investors Balk - WSJ.com
This subsidized lending program just looks like major league subsidy to the securities industry with layers of transaction costs that incentivize people to trade in potentially irrational way with cheap money and are likely to contribute to TARP assets price inflation . Why not just do market making as I have repeatedly suggested?
The key mistake here is that policy makers seem to confuse
- incentivizing trade on securities with high economic impact which should be the mission of the government here and would lead to a more rational underwriting industry practices going forward
vs
- encouraging the potential reckless issuance of new securities which may in fact perpetuate the practices that led to this mess.
This subsidized lending program just looks like major league subsidy to the securities industry with layers of transaction costs that incentivize people to trade in potentially irrational way with cheap money and are likely to contribute to TARP assets price inflation . Why not just do market making as I have repeatedly suggested?
The key mistake here is that policy makers seem to confuse
- incentivizing trade on securities with high economic impact which should be the mission of the government here and would lead to a more rational underwriting industry practices going forward
vs
- encouraging the potential reckless issuance of new securities which may in fact perpetuate the practices that led to this mess.
Friday, March 13, 2009
John Stewart Vs. Jim Cramer
The Daily Show with Jon Stewart | Stewart vs. Cramer:
A few thoughts:
1) "Is collective responsibility an alibi?"
This topic of my high school philosophy dissertation exam seems to me like something that out to be debated or revisited here. All the culprits in the present crisis seem to think collective responsibility is an alibi. I differ.
How at the very least about a journalistic or governmental effort to search and single out the heroes?
2) "It is much easier for a man to fail conventionally than to stand against the crowd and speak the truth" John Maynard Keynes
The usual expectation is that the one(s) who stood against the crowd and spoke the truth at great cost to themselves would reap the benefits when convention fails.
Painful as it was to watch for Mr. Cramer, I suspect he is still going to be having his show and make even more money "head he wins, tail you loose".
I have spent a decade on BICs, and BICs would have helped and can still help get out of this... And here am I, just as pitiful, out of the public sight and out of the public mind.
Where is the morality of all of this?
3) Is it time to debunk the Financial Investment Equity Risk Premium Fallacy
which says over the long term stocks outperform bonds?
(1976 Ibbotson Brinson) .See also:
http://www.dailyspeculations.com/scholarly/LongTermStockReturns.html
http://corporate.morningstar.com/ib/documents/MethodologyDocuments/IBBAssociates/IntnlRiskPremium.pdf
How about saying "Lies, damned lies, and statistics"
I bet that buying government I-Bond (inflation bonds) would yield a better return net of management fees and taxes than the large majority of index funds.
But saying that would destroy the entire financial advisory industry. So let's keep it quiet....
4) Finance and Economics is a complex and serious business that must be handled with nuance, intellectual sophistication that can sound very boring to simply minded persons; by attempting to be simplistic and entertaining to attract huge audiences, CNBC & Cramer dig for themselves huge holes in which they ultimately fall
The Stewart clip evidence against Cramer:
CARLY SIMON - YOU'RE SO VAIN referred to by stewart in the interview
A few thoughts:
1) "Is collective responsibility an alibi?"
This topic of my high school philosophy dissertation exam seems to me like something that out to be debated or revisited here. All the culprits in the present crisis seem to think collective responsibility is an alibi. I differ.
How at the very least about a journalistic or governmental effort to search and single out the heroes?
2) "It is much easier for a man to fail conventionally than to stand against the crowd and speak the truth" John Maynard Keynes
The usual expectation is that the one(s) who stood against the crowd and spoke the truth at great cost to themselves would reap the benefits when convention fails.
Painful as it was to watch for Mr. Cramer, I suspect he is still going to be having his show and make even more money "head he wins, tail you loose".
I have spent a decade on BICs, and BICs would have helped and can still help get out of this... And here am I, just as pitiful, out of the public sight and out of the public mind.
Where is the morality of all of this?
3) Is it time to debunk the Financial Investment Equity Risk Premium Fallacy
which says over the long term stocks outperform bonds?
(1976 Ibbotson Brinson) .See also:
http://www.dailyspeculations.com/scholarly/LongTermStockReturns.html
http://corporate.morningstar.com/ib/documents/MethodologyDocuments/IBBAssociates/IntnlRiskPremium.pdf
How about saying "Lies, damned lies, and statistics"
I bet that buying government I-Bond (inflation bonds) would yield a better return net of management fees and taxes than the large majority of index funds.
But saying that would destroy the entire financial advisory industry. So let's keep it quiet....
4) Finance and Economics is a complex and serious business that must be handled with nuance, intellectual sophistication that can sound very boring to simply minded persons; by attempting to be simplistic and entertaining to attract huge audiences, CNBC & Cramer dig for themselves huge holes in which they ultimately fall
The Stewart clip evidence against Cramer:
CARLY SIMON - YOU'RE SO VAIN referred to by stewart in the interview
Thursday, March 12, 2009
Charlie Rose - A conversation with Timothy Geithner, U.S. Treasury Secretary
Charlie Rose - A conversation with Timothy Geithner, U.S. Treasury Secretary
In this interview he made a lot of sense. His enunciation of principles is coherent; however the actual tools to effect those principles, while not entirely unacceptable are not always the most effective I would think of.
"Ars sine scientia nihil est"
For example, when he is talking about doing the private public partnership to unclog tarp assets . They are going to lend money to private investors so that the can go and buy tarp assets. The contention I have repeatedly made is: why would this be better than setting up a market making operation on those assets traded at a refined level of granularity?
In this interview he made a lot of sense. His enunciation of principles is coherent; however the actual tools to effect those principles, while not entirely unacceptable are not always the most effective I would think of.
"Ars sine scientia nihil est"
For example, when he is talking about doing the private public partnership to unclog tarp assets . They are going to lend money to private investors so that the can go and buy tarp assets. The contention I have repeatedly made is: why would this be better than setting up a market making operation on those assets traded at a refined level of granularity?
Monday, March 9, 2009
They Tried to Outsmart Wall Street - NYTimes.com
They Tried to Outsmart Wall Street - NYTimes.com
The newsy or useful point the article is trying to make kind of eludes me. From the front page snapshot, I thought there would be some statistic showing demand for quants has shot up with the crisis other than the discrete opinion of a quant professor who has a conflicted interest in selling his academic curriculum to prospective students. The reporter apparently just opened his quant rolodex and got a number of known quants say something that would make them look good and prop their books. Unlike what the title "They Tried to Outsmart Wall Street" would suggest, it does not try to hold any of those accountable.
How about BICs Sir, how about BICs, it actually would help...
I cry a river over this...
As I have described at length in other writings(See this or this ), and keep on saying, this crisis was a failure of the existing mathematical modeling framework at describing the real world dynamics of underlyings. Therefore the corresponding hedging and risk management strategies failed to represent reality and this fact becomes most obvious at times of crisis. One of the reasons for this development is the over-representation of former physicist at the highest levels of "quantdom" who have forced the adoption of a framework coming from another world. But "It ain't physics". It just ain't.
And I cry a river over this. I just cry a river over this....
The newsy or useful point the article is trying to make kind of eludes me. From the front page snapshot, I thought there would be some statistic showing demand for quants has shot up with the crisis other than the discrete opinion of a quant professor who has a conflicted interest in selling his academic curriculum to prospective students. The reporter apparently just opened his quant rolodex and got a number of known quants say something that would make them look good and prop their books. Unlike what the title "They Tried to Outsmart Wall Street" would suggest, it does not try to hold any of those accountable.
How about BICs Sir, how about BICs, it actually would help...
I cry a river over this...
As I have described at length in other writings(See this or this ), and keep on saying, this crisis was a failure of the existing mathematical modeling framework at describing the real world dynamics of underlyings. Therefore the corresponding hedging and risk management strategies failed to represent reality and this fact becomes most obvious at times of crisis. One of the reasons for this development is the over-representation of former physicist at the highest levels of "quantdom" who have forced the adoption of a framework coming from another world. But "It ain't physics". It just ain't.
And I cry a river over this. I just cry a river over this....
Sunday, March 8, 2009
Saturday Night Live - Geithner Cold Open - Video - NBC.com
Dear Mr. Secretary Geithner,
Please , read this:
Please, please, please
Please , read this:
How to Value Illiquid Toxic Assets clogging up the banking system
Please, please, please
Friday, March 6, 2009
Steve Forbes Says Barack Obama's Economic Policy Repeats George W. Bush's Mistakes - WSJ.com
Steve Forbes Says Barack Obama's Economic Policy Repeats George W. Bush's Mistakes - WSJ.com
I strongly disagree with this argument against mark to market. As for dealing with market illiquidity, as I explain in my article on how to price illiquid TARP assets, when trading of assets economically vital is disrupted, government should set in to play a market maker's role, one of the additional positive results of such an approach being to enable effective market to market.
It is unfortunate that many it is shaping as republican vs. democrat thing.
I strongly disagree with this argument against mark to market. As for dealing with market illiquidity, as I explain in my article on how to price illiquid TARP assets, when trading of assets economically vital is disrupted, government should set in to play a market maker's role, one of the additional positive results of such an approach being to enable effective market to market.
It is unfortunate that many it is shaping as republican vs. democrat thing.
Monday, March 2, 2009
BICs Trivia
Sunday, February 22, 2009
Fair Value Pricing, Government Market Making and TARP
I have just posted this on knol:
How to Value Illiquid Toxic Assets clogging up the banking system (Work in Progress)
This article argues that the administration would get a fairer deal in buying troubled assets by becoming a market maker on those assets bought at a most refined level of granularity using a proposed relatively straightforward market-making method. This approach further has the benefit of being minimally surgically invasive while most speedily addressing the problem.
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