Corzine - BICs - Impressions - What is acceptable - Rent Seeking

 Everybody seems to be sporting about the latest travails of Mr. Corzine, but many if not most (or virtually all) of those who seem to be moralizing now surf or have surfed the same rent seeking privileges that have little to do with actual competence. Every now and then, the bubble pops, a few unlucky bad ones pay for all the systemic sins, but the system itself perdures, with incremental adjustment here and there.

True change, whether in politics, social values or rules for economic entitlement come only after a forceful clash in which absurd existing rules or laws may be trampled in the process for a fairer order to emerge.
The present crisis continues its slow bleed because that necessary purifying process did not occur. Even after the comparatively milder dot-com bubble popped, the clean up was more extensive and more were held accountable.

Despite all the gospel to the contrary, it can be uncommonly difficult for the uncompromising innovator that the system proclaims to value above all to be heard. This seems truer if such innovations precisely pertain to the core issues that have put the system to its knees.

We persist in looking for solutions where we are least likely to find them even though the historic record is unambiguous that lasting solutions to systemic problems more often than not come from outsiders. Up to now the system has failed to look/consider or even acknowledge solutions proposed by outsiders. One of the problems exarcerbating our socio-economic issues is that the existing power structure is poisoned by a system of "normative meritocracy" blinded by a codified system of merit that tend to undervalues when it does not simply obliterate all other forms of emerging and more relevant competencies.

 Democracy in politics, branded academic credentials, peer review and other idealistically sounding principles collude to create dystopian realities for true innovators whose ideas and works can actually benefit the greater good.


BICs in the many ignored ideas and works it leads and spread throughout this blog can only be seen as an ultimate example of a flawed system of incentives and punishments. See also:  US Patent No. 7,933,824 .


References:
 US Patent No. 7,933,824.
NYT Editorial Nov 2, 2011: Mr. Corzine's Big Bet
NY Times- Nocera: Corzine Crashes like It's 2008
WSJ: Corzine Agonistes 
Others Pay Price for Corzine’s Risky Revenge: William D. Cohan
Douthat: Our reckless meritocracy

Estimating Asset Costs for TARP/PPIF in a Market Making Framework & BICs - a knol by Phil Kongtcheu

Estimating Asset Costs for TARP in a Market Making Framework & BICs - a knol by Phil Kongtcheu


This article is a follow-up to the knol article "Fair Value Pricing, Government Market Making and TARP" and uses the concept introduced in the knol article " Introduction to Basis Instruments Contracts (BICs) for Mathematics, Finance, and Economics".

In this article we seek to estimate the proportion of assets ultimately held by the Government in a market making model, their cost and the parameters needed to make such estimates.

An important financial insight of this analysis is that we show that market making results in earning a spread that makes market making loss unlikely.

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.

BICs Trivia

This small questionnaire helps you make sure you've understood some basics about BICs. It will help improve presentation of the material provided. First reading the other BICs related material posted in this site may be helpful. Many Thanks

Introduction to BICs Exchange Systems

In this post, I just added a presentation that hopefully more clearly stresses the relevance and applicability of BICs as a sorely needed risk management tool