TwIsTeR Ramblings: Finance and Economics (or 2 Idiots Trying to Act Smart.)
Im too tired to blog nowadays. Especially after the stone cold stunner of Liza's comments on my post of Nature vs Society (and brilliant ones at that):P. I was going to give a finance post, but man, im too freaking lazy. So instead, I copied paste from desmond's note as we discuss on various financial aspects in a prim and proper way. In other words... 2 idiots trying to act smart. Enjoy.
Desmond's note:
Be it bonds, funds or anything that is sold by banks or institutions, how much do you know about it. Even the money market fund or our banks could be vulnerable.(have you ever thought of it)
Taking insights in the Madoff and now standford ponzi scheme, of what scales are local issues such as sunshine empire.. Fixed Deposits are structured deposits are getting so complex, that risk is taken off the balance sheet and borne by investors such as us, suckers.. While they intelligently keep the investment fees, brokerage fees and fund management fees.(Arbitrage) The clauses state that any small exposure of section11 for a structured deposit, could render the fund worthless(eg. Lehman Bros). The prospectus doesnt even give full details of the companies invested, only the sector. Yup, banks are too big to fail! So without knowledge in the banking and finance, securities or investment sectors, we are all just making the rich richer and safer. Where is the ethics of the finance sectors that we trust so much, should we just revert back into putting our $ into Milo tins?(not promoting Nestle)
Its true that only in crises that we observe the full effects of the risk or schemes.. Only at such times are regulators able to fish out crucial loopholes and compare them with benchmark indexes, question their credibility and freeze their assets. Its always a fight between regulation and financial innovation. Talking about the lag, money and bonuses still leads the way up front, after that, RUN FAST!
Its a game of bluff-Bluff or be fooled. So its not dont invest, if you dunno wtf you investing in, dont! just bloody heck ask someone who knows la, zzz (third person)
PS. I wonder if I can find a banking job after posting this, haha.. Prob update with more figures later.
Ethics in finance is like art, you have rely on what you believe is right and wrong. What is unethical to you, is perfectly lawful business to another. Therefore, one can argue that its makes perfect business sense to maximise the profits, otherwise don't get involved in finance. While Im not supporting dubious schemes such as Standford Ponzi or Sunshine Empire MLM, Im just saying it would be downright silly to judge other forms of investment just based on the 1 or 2 rotten apples.
The problem with ethics is usually the gray area where the law doesn't cover. With respect to the law-ethics divide, i'll leave you a quote from my text on ethics.
"When men are pure, laws are useless; when men are corrupt, laws are broken" - Benjamin Disraeli
I oso wan to prepare a doc to compare all the different policies, and to what extend each better or minimal impact
Which leads to WJ point- if we do not pump in liquidity, how will we grow. free-banking theory? hmmm..
Not that investors are suckers, but we are just playing on a global gambling table.(no link to IR). If we do not calculate our risk, not mathematically, but by not doing our homework, we are gambling! We might as well play scissors, papers, stone. 33% chance its a draw, 33% chance win, 33% chance lose. Assumed under normal situations and no psychology or fixed pattern observed.
'judge other forms of investment just based on the 1 or 2 rotten apples'
there exists every oppurtunity to tamper results, balance sheet restructuring, different performance measures, worse, scam. Such can be minimized to the minimum, just how?
Evidence:Nick Leeson 827m pounds losses (barings bank 1995)
-Hmmm, law? To be cont..
Damn, I lack the law part for argument. But too much twisting on procedures, even money laundering. And its crazy debating with lawyers. We can link it to crime* instead for the discussion.
My stand is still defensive on the investors point of view as victims of the financial system.
Cool, direct application of knowledge. But all we stated so far is of a systematic and economic viewpoint. Damn hard to use direct Finance concepts in an argument.
Here is the thing... The argument for free market forces in linking to the Efficient Market Hypothesis is severely flawed due to numerous factors. Many of these factors are based on human error and judgement, and the intervention of regulation. A good example is the 700+ billion US$ economic stimulus package in an effort to help (directly or indirectly) failing banks. The interesting thing abt crisis is that it streamlines the economy of a country, making it more efficient through a financial survival-of-the-fittest type of environment. If perhaps the banks were allowed to fail, perhaps that would streamline the already-frail banking industry to be more resistant to future bank runs or liquidity crisis.
In truth, there is no real right or wrong answers, just unproven theories until someone has the balls to test them out.
In truth, nothing dealing with big money is realli perfect in the ethical sense, bt the advancement of technology combined with the strict policing of trades has lowered the usage of money scams, accounting fraud and dubious schemes. True, they do exist, some even to large scale. But from what ive seen, most firms have actually left the fraud or scheme worse off when they went into it (see Enron fraud). Perhaps the best type of free market policy is to allow market forces to operate under the watchful eyes of the law.
If you ask me, to introduce ethics into financial world is equivalent to playing a piano to a bull. The concerns of ethics has to be upheld by policymakers and enforcers, but the actual traders will always feel that money-making is their right.
Well, not really into nationalisation of banks, but if there would really be greater availability of risk free deposits, sets the clear difference between them and investment banks. The investment banks would have to offer higher interest, to compensate the risk taken. But the policy makers would have to rake their brains earning the required returns, and clearing short term demand for withdrawal. Would also greatly slow down the development of the banking sector.
Den again, are we growing TOO rapidly beyond control? We take steps controlling money supply. Hmmm, how does a govt control growth? taxes too obvious, haha..
*Ethics-Finance, where $ involved, just no ethics, concluded, haiz..
The thing about crisis is that is does streamline the economy, making it more efficient. Poor performance workers are retrenched, prices are lowered, poorly run businesses fail, which leads to a drop in that 'over-competition' u mentioned. The best companies emerge, generally reinstating consumer confidence and a recovery in the economy in general.So, in a way, an economic crisis is a form of market correction, if govts would just let it. True, profiteering does exist in a greater extent, but it is not as if the country's enforcement agencies suddenly disappears.
Mergers and acquisitions, haha, damn, skipped that lect, lol.. KK, i got half of the stuff up, so i will re-draft den discuss again. At least facebook has some uses, lol
Cool, look forward to it... tho I prob shld spend more time studying n less time going facebook and replying your crap..
Securitisation, the process is in simply termed moving of assets off balance sheet for the banks. Well, technically, there is no wrong between sharing of risk with insurance companies on toxic debts, rating of agencies who risk their reputation and consumers who share the risk with banks for higher returns. BUT, they are now, transferring risk and NOT sharing risk. So when the sub-prime hit, someone must fail/fall. If not the banks, not the insurance companies, not the agencies, and obviously not STUPID consumers like us, who does the debt go to? Innocently, the government, lol.. Too big to fail, or doomed to fail.
Im not going to say who is right and who is wrong. I think both of us have too little knowledge on the subject. So it is really trying to act smart.
Our body is a miraculous thing. Every action, every thought, every emotion created by the synergy and efficiency of cells. It is like gigantic jigsaw puzzle of a million, trillion pieces assembled together to reveal a brilliant masterpiece.If there is any miracle required for proof of God, our very own body, capable of great acts and thoughts, is, to me, proof enough.
Our body and, in extension, our nature is built to survive despite the surroundings. Nature has given our bodies the ability to adapt to our surroundings. Yet, as our society changes in a blinding pace, our natural instincts, created or evolved to help us survive, has become a hindrance instead. Our nature has failed to adapt to a rapidly changing environment.
Case in point: Why is it there is a huge number of obese people in developed countries? The evidence is staggering, the more developed a nation is, the greater the number of overweight people. Why is that so? The obvious answer would be the impact of a life in luxury, the increase in rich food available due to wealth and the lack of exercise due to exceedingly busy schedules. Yet, here is the strange thing. These educated people continue to eat themselves to death, even in full knowledge that it is harmful to their health. Why? We cannot claim that eating is an obsession (although in some cases it really is) since eating is considered a necessity for survival.
The powerful urge to eat stems from our instinctual desire to store nutrients. Back in men's early days, food was scarce, and dependent on game and gathering. This scarcity has cause our bodies to adapt, storing excess nutrients as fat in case of times of need. Fast forward to the present, this characteristic hasn't changed much. And as we gulp down our food to prepare for the starvation that never comes, our body gets larger horizontally.
Why is is that men are more likely commit adultery? A theory put forth by Teng Soong is that men are naturally polygamous while women are monogamous. The reason for the difference also seem to lie in our roots. In the past, when men were the hunters and women were the nurturers, the survival rate of hunting and gathering while exposed to prehistoric animals of gargantuan size and harsh climate is significantly low. Lets say at 25%. This meant that the number of men to women is at the ratio of 1 is to 4. Men had to be polygamous in order for the species to survive and reproduce, while women stayed largely monogamous. Again, the impact of this in current society can be seen in the large number of divorces, adultery, or slow-growing or declining population in developed countries like Germany or Japan.
Here is another interesting example. Question: Why is it that that we have a higher propensity to consume when we have a higher income? Why is it that people will manage to spend away millions of dollars after just winning the lottery in just a few days? These are not isolated incidents, but consistent throughout since the study of economics. To put the question closer to home: Why is it we spend more money on the days we receive our paychecks, or within the week in anticipation of receiving our pay?
According to Teng, one theory is that in the days of rampant food scarcity, the sole form of resource to men was food. And since technology to preserve food was not developed yet, the best thing we can do is to engorge ourselves, relying on our own body fat as a form of storage as explained by the first example. In current society, the form of resource has changed but not that primal instinct to indulge ourselves when the resource is present.
As we ponder on these examples, it is important to note that the separation from these instincts are what separates us from animals. We have to consider for ourselves the consequences, be it in our own ethics, health and other factors.
Lets discuss. Should we abandon our instincts completely? Or is there perhaps some room for compromise? Can we adjust society to suit these instincts, or should we just hold firm? Do you have any other examples of Nature vs Society that you care to share? What are your thoughts to the matter?
Telling us to obey instinct is like telling us to obey "people" .People say different things: so do instincts. Our instincts are at war.... Each instinct, if you listen to it, will claim to be gratified at the expense of the rest....
Instinct is intelligence incapable of self-consciousness.
The instinct of nearly all societies is to lock up anybody who is truly free. First, society begins by trying to beat you up. If this fails, they try to poison you. If this fails too, the finish by loading honors on your head.
There is a growing phenomenon as the sport of basketball slowly increasing in popularity. People began to view basketball not just as a sport for enjoyment, for spectators and players alike, but as a mathematical puzzle or problem. They begin to come up with statistical aspects that seem to determine the production of the game. Points, rebounds, assists, blocks, steals become part of the numbers game as people try to take the complex sport and break it down to simpler, easier to understand models.
Yet, anomalies started to occur more and more often. The game of basketball refused to be understood. True enough, the stats showed a bit of the efficiency of the players, but it never showed how a player can benefit his team, basketball being a perennial team sport. The current statistical model was also inadequate to show the defensive aspect of the game; blocks and steals couldnt be a true indicator.
So the statisticians, like ESPN's John Hollander, introduced new revolutionary statistics to try to explain away the game. PER, efficient field goal percentage, +/- were new statistical aspects in the team and individual level. Opponent field goal percentage (the 3 point line, in the paint and the mid-range) and forced turnovers and overall defensive rating was introduced to bread down the defensive aspect. Pace factor was also included to level up the discrepancies of how pace influences the outcome of performances and wins/loses.
Yet, statistical anomalies appeared time and time again, defying the completeness of the models. Players like Shane Battier, as stated in this brilliantly written article by Micheal Lewis, seemed to be helping his team without posting any significant statistical impact. In his article, he writes:
"The virus that infected professional baseball in the 1990s, the use of statistics to find new and better ways to value players and strategies, has found its way into every major sport. Not just basketball and football, but also soccer and cricket and rugby and, for all I know, snooker and darts — each one now supports a subculture of smart people who view it not just as a game to be played but as a problem to be solved. Outcomes that seem, after the fact, all but inevitable — of course LeBron James hit that buzzer beater, of course the Pittsburgh Steelers won the Super Bowl — are instead treated as a set of probabilities, even after the fact. The games are games of odds. Like professional card counters, the modern thinkers want to play the odds as efficiently as they can; but of course to play the odds efficiently they must first know the odds. Hence the new statistics, and the quest to acquire new data, and the intense interest in measuring the impact of every little thing a player does on his team’s chances of winning. In its spirit of inquiry, this subculture inside professional basketball is no different from the subculture inside baseball or football or darts. The difference in basketball is that it happens to be the sport that is most like life."
He continues:
There is a tension, peculiar to basketball, between the interests of the team and the interests of the individual. The game continually tempts the people who play it to do things that are not in the interest of the group. On the baseball field, it would be hard for a player to sacrifice his team’s interest for his own. Baseball is an individual sport masquerading as a team one: by doing what’s best for himself, the player nearly always also does what is best for his team. “There is no way to selfishly get across home plate,” as Morey puts it. “If instead of there being a lineup, I could muscle my way to the plate and hit every single time and damage the efficiency of the team — that would be the analogy. Manny Ramirez can’t take at-bats away from David Ortiz. We had a point guard in Boston who refused to pass the ball to a certain guy.” In football the coach has so much control over who gets the ball that selfishness winds up being self-defeating. The players most famous for being selfish — the Dallas Cowboys’ wide receiver Terrell Owens, for instance — are usually not so much selfish as attention seeking. Their sins tend to occur off the field.
It is in basketball where the problems are most likely to be in the game — where the player, in his play, faces choices between maximizing his own perceived self-interest and winning. The choices are sufficiently complex that there is a fair chance he doesn’t fully grasp that he is making them.
Taking a bad shot when you don’t need to is only the most obvious example. A point guard might selfishly give up an open shot for an assist. You can see it happen every night, when he’s racing down court for an open layup, and instead of taking it, he passes it back to a trailing teammate. The teammate usually finishes with some sensational dunk, but the likelihood of scoring nevertheless declined. “The marginal assist is worth more money to the point guard than the marginal point,” Morey says. Blocked shots — they look great, but unless you secure the ball afterward, you haven’t helped your team all that much. Players love the spectacle of a ball being swatted into the fifth row, and it becomes a matter of personal indifference that the other team still gets the ball back. Dikembe Mutombo, Houston’s 42-year-old backup center, famous for blocking shots, “has always been the best in the league in the recovery of the ball after his block,” says Morey, as he begins to make a case for Mutombo’s unselfishness before he stops and laughs. “But even to Dikembe there’s a selfish component. He made his name by doing the finger wag.” The finger wag: Mutombo swats the ball, grabs it, holds it against his hip and wags his finger at the opponent. Not in my house! “And if he doesn’t catch the ball,” Morey says, “he can’t do the finger wag. And he loves the finger wag.” His team of course would be better off if Mutombo didn’t hold onto the ball long enough to do his finger wag. “We’ve had to yell at him: start the break, start the break — then do your finger wag!”
This seem to have encompass what I wrote in my post of basketball as a complex sport. In its unique nature that seems to simulate life in fast forward, it becomes exceedingly hard for statistics to be more than vaguely accurate, just like it is when computing life's decisions.Often statistics are used as a drunken man uses lamp posts... for support rather than illumination.
Statistics are no substitute for judgment.
Sorry for not blogging, my schedule has not put me in that contemplative mood suitable for my blogging, and it seems that it will not let up. Damn exams are approaching close and closer. Well, with that...
Emotions are essential in dictating our actions, our decisions. In fact, for some of us, it is the primary driving force of how we act. A study was done on people who do not feel any emotion, caused by damage to the part of the brain that is responsible for it. It was shown that, in terms of decisions, they were indecisive. Worse than indecisive, in fact, since they simply cannot make decisions that go beyond logical thinking, like "do you prefer the red dress or the green one?".
Yet, despite that, our efficiency-driven culture emphasizes on the fact that we should repress emotions, to be detached from yourself, so to speak. It is true, powerful emotions normally deprives the person the ability to think rationally, rendering that person "inefficient". The best thinkers and scientists of our time were known to be abnormally detached.
How we deal with these emotions are also intricately linked to our character that defines us as unique individuals. Do we swallow our emotions? Do we use one emotion to cover another? Or maybe we just wear our emotions on our sleeves, ready to cry, laugh and jump for joy at the drop of the hat? The strange things is that we all have the same emotions, yet, because of our character, react so differently to that same feeling.
I have come to the conclusion that emotion cannot be controlled directly by our will. It is how we truly feel, even if we try to deny its existence. So, to say "don't feel sad" is kinda contradictory of what emotions are.
However, emotion is also depends on perspective, which lies the true form of control. Although we cant change the way we feel, we can change the perspective to alter the way we feel. And we do it so often in our everyday lives that we are not even aware of it. Take the concept of 'sour grapes' for example. We can truly desire for some thing, yet if it proves to be unattainable, we dismiss it as flawed or perhaps not worthy of our attention after all, thereby changing our perspective to change our emotions.
Many would say that it is not being true to yourself. That is, to me, a strange statement. What is this 'yourself'? How do you know if it is truly you. To be true to yourself means to accept whatever emotion you initially feel, good or bad, without exception. Why accept emotions like anger or sadness if it does nothing to help you?
Im not saying sadness or anger are never useful. There are times anger is needed, like standing up for urself for instance. Sometimes sadness is required, to get in touch with another fellow human being for example. Yet, there are times these emotions just leave you devastated, when the issue does not merit such an emotion. For example, a girl who cries when her dress gets torn, or a student that angry when he heard he got AAAB for his A levels (that wont be me, like ever).
The only way to NOT feel emotion is to truly detach your self away from your body. This out-of-body experience is the same as viewing the world with indifference, an emotional retreat. It is probably the ultimate change in perspective. It can be useful, in dealing with problems that affect one in a great deal. However, a word of caution, prolonged use can actually cause damage to a person's psyche. It can create an apathetic view of life, which lead many to suicide.
So how can we get rid of excessive emotions? Like i said before, we cant. But we can alter the way we feel by changing our perspective. We can think "Hey, this dess is just a piece of cloth anyway, why go overboard?" Or "Well, this result just delays me a little further in the long run, it wont prevent me from being successful if I work hard." In fact, most problems that seem to affect us so turn out to be insignificant or inconsequential in the bigger view of things. So while we must enjoy the little things in life, we must also be able to take a step back to get a different perspective, especially when we are down.
P.S. Hey deb, this post is for you. If you are reading this, hope you feel better and give a little smile.
The sign of an intelligent people is their ability to control emotions by the application of reason.
Men decide far more problems by hate, love, lust, rage, sorrow, joy, hope, fear, illusion, or some other inward emotion, than by reality, authority, any legal standard, judicial precedent, or statute.
TwIsTeR Ramblings: Immortal Ideas (or the mortal desconstruction of them)
Ideas are very strange. They are invisible, intangible, ethereal. It is useless, yet so very powerful. Ideas are what drives the human race. It is the birth of innovation and the start of apathy. Ideas are concepts used to create works of arts or wonderful inventions. It is used to solved complicated problems and serve as inspiration for an individual, a country or the human race.
Which is why I value ideas alot. Im a writer by nature, and ideas are essential for my work. It was also the basis of my very childhood. Which is why I cannot forgive any action taken to destroy a good idea. What do I mean? Ideas are useless if no action is accompanied by it. Therefore, the action has to live up to the quality of the idea or concept that was imagined or created. If a writer has a great concept or storyline, yet has poor command of english, or woeful attention to detail, the idea is irrevocably destroyed, never to be recovered again. Sure, another can take up the idea to renovate and redo, but part of the quality of the idea is lost already. People can brand it as a copy, or simply dismiss the work as the first piece was bad. The idea has lost its value and its originality that made it so very valuable in the first place.
Which is the reason why i cannot imagine how beautiful concept can be so utterly, so terribly ripped apart in the monstosity of the movie called 'Inkheart'. It was as if it was taken from a 10 year old child's writing. The acting, in my opinion, was brilliantly done, especially by Brandon Fraser, the camera-play and casting was also above average. The writing and plot, however, was so horribly screwed that I wondered how i managed to waste 10 bucks in a rare midnight movie with my girlfriend on that piece of shit.
And the concept was wonderful. In my hands, or anybody's hands for that matter, together with such a budget, i could have created a wonderful piece, or at least infinitely better than the current trash. It was simple, a gifted individual with the ability to create what he reads out loud into real life. A clever, unique, original concept. Yet, it was borne through a fool of a writer. Given a chance, I swear I will shoot the fellow who destroyed it.
The writer couldnt decide a theme for the movie. Was it a romance movie? An action movie? Or a fantasy movie? He flirted from one theme to the next, never completing any of it. As he did with the storyline which had barely any coherence to it. Characters are supremely incomplete, sprouting out abilities that leave the poor viewer completely bewildered.
How on earth did Brandon Fraser's daughter suddenly become a silvertongue (those people with the ability to bring fiction to reality)? How did that ali baba character suddenly learn to blow fire from Dustfinger? Why did brandon fraser jump, run and hide to save his wife when all he needed to do was bring some books (like maybe a war book with lots of guns?) and just bloody use his ability? How did the mother get read out of a book that wont contain her name in it at all? Why must a person be sucked in as a replacement (which i think is a pretty lame idea)? What the f#$% is story of inkheart (inkheart is the story most referred to in the movie) in the first place? Why must they go through all the stupid trouble to go find the author of Inkheart to get the manuscript of the book, and not bloody hell use it in the first place? How come Dustfinger can be so stupid? How on earth did the writer manage to suddenly declare ali baba to be in love w brandon fraser's daughter? How on earth did the bloody motherf%^king writer manage to create this piece of $#!t and who's the dumbass ignoramus that approved it?
Most ironical thing about it? It was a movie about books *starts sobbing*.
Okay... I think im done ranting. Seriously, I recommend all to go watch it to c how bad it is. Dun pay for it though, go download off the net. Its not stealing, cos it is not worth to pay a bloody cent for it.
Update: I just heard that this wasnt even an original idea but an adaptation of another film. Which makes it that much worse. You take another person's idea and you destroy it. It wasnt even your own.
P.S. On a slightly more cheerful note... This is damn funny. (Warning: more cursing that this post)
