Epitaph For The Masters Of The Universe.

[wonderpup]

I was trying to explain to someone who knows even less than I do how the derivatives issue makes the failure of Greece so much more dangerous than it might have been, given the opaque nature of the instruments and the unknown levels of counterparty risk involved.

So, after me waffling for a minute or two they just smiled and said " You mean; just because it's complicated doesn't mean it works."

And I thought this was the best summation I'd ever heard to explain the mess the bankers have created- their delusion being that if you just passed risk through enough algorithms it would magically disappear.

So, after the still twitching corpse of the neo liberal banking experiment is finally laid to rest my choice for the headstone inscription would be both an epitaph and a warning;

Just because it's complicated, doesn't mean it works.

What would your inscription read?

[callaght]

Brilliant and gets straight to the point!

[200p]

If you can make it complicated (for others), do it. Profit lies in the confusion.

[24gray24]

They will write their own epitaph. So it will read as follows:

Hear lies the body of x, highly successful banker in England, made several million from helping business, conributed ten thousand to charity. Left several childred, who went to the finest schools and now live in luxury for generations. Lived to ripe old age of 85, in Italy.

History will not remember what happened to the poor.

[Tonkers]

Quoting someone on here:

I only wanted a cheaper house, not the world to implode

[Injin]

Chaos is just the unmeasured.

The real world isn't measurable.

Mine would read "Congratulations on the NWO. Now how are you going to get anyone to work for it? Tossers."

[nmarks]

The mathematical basis for pricing derivatives is of course the Black-Scholes equation; while this was a leap forward academically its implementation commercially (and related methodologies) has been disasterous. The credit boom it unleashed failed to consider human behaviour properly.

Taking the BS model (and related methodologies) as the green light for the credit expansion was akin to taking Newton's F = ma equation as an adequate breakthrough to send man to the moon.

While F = ma is a key equation in sending man to the moon, by itself it is wholly inadequate, in the same way the mathematics of derivatives is insufficiently developed.

Despite fighting a cold war against each other, the super-powers had the integrity to refrain from send men into space until the technology was proven safe. Pride was at stake, neither side wanted to risk loss of face.

The banks have no such qualms; as a consequence of their behaviour all of us are now at severe risk of being sucked into a Black Hole from which there is no escape.

Edited October 4, 2011 by nmarks

[Jimmer]

perhaps the headstone should read, 'Public convenience'

[Game_Over]

I was trying to explain to someone who knows even less than I do how the derivatives issue makes the failure of Greece so much more dangerous than it might have been, given the opaque nature of the instruments and the unknown levels of counterparty risk involved.

So, after me waffling for a minute or two they just smiled and said " You mean; just because it's complicated doesn't mean it works."

And I thought this was the best summation I'd ever heard to explain the mess the bankers have created- their delusion being that if you just passed risk through enough algorithms it would magically disappear.

So, after the still twitching corpse of the neo liberal banking experiment is finally laid to rest my choice for the headstone inscription would be both an epitaph and a warning;

Just because it's complicated, doesn't mean it works.

What would your inscription read?

Did what the politicans asked,

And died rich men

[wonderpup]

History will not remember what happened to the poor.

Too true- for example, who remembers the name of the guy who dropped the guillotine on Marie Antoinette?

[LuckyOne]

The mathematical basis for pricing derivatives is of course the Black-Scholes equation; while this was a leap forward academically its implementation commercially (and related methodologies) has been disasterous. The credit boom it unleashed failed to consider human behaviour properly.

Taking the BS model (and related methodologies) as the green light for the credit expansion was akin to taking Newton's F = ma equation as an adequate breakthrough to send man to the moon.

While F = ma is a key equation in sending man to the moon, by itself it is wholly inadequate, in the same way the mathematics of derivatives is insufficiently developed.

Despite fighting a cold war against each other, the super-powers had the integrity to refrain from send men into space until the technology was proven safe. Pride was at stake, neither side wanted to risk loss of face.

The banks have no such qualms; as a consequence of their behaviour all of us are now at severe risk of being sucked into a Black Hole from which there is no escape.

It is actually even simpler than that. The quants and traders lost sight of the fact that models are just that and not an all encompassing, accurate description of reality under all circumstances.

Once the models and reality began to diverge, most of them were doomed.

[wonderpup]

Did what the politicans asked,

And died rich men

Name a single politician who really understands derivatives as practised by Wall Street. The idea that Blair. Brown or Cameron were running this show is laughable.

No- the banksters thought they had discovered the philosophers stone of risk elimination- and blew themselves up- just like every other damn fool who thought he could turn lead into gold,

[aa3]

I agree with Injin many rich people got that rich by creating wealth. Like an Indian steel magnate who has built a series of major steel plants in his nation. He becomes a billionaire, but has created tens of billions in wealth for his nation.

In comparison our bankers who have lost their investors money, lost a lot of their clients money, ran companies they bought into the ground.. the only person they enriched was themselves.

[jammo]

"Here lies the problem"

and on the back:

"And the solution"

[jaspers]

Too true- for example, who remembers the name of the guy who dropped the guillotine on Marie Antoinette?

Three finger Frederick?

[nmarks]

It is actually even simpler than that. The quants and traders lost sight of the fact that models are just that and not an all encompassing, accurate description of reality under all circumstances.

Once the models and reality began to diverge, most of them were doomed.

Agreed, but my point shows that when science is in the right hands and being used for the right reasons it is an inspiration. When science is used otherwise it poses a danger to us all.

The consequences of the power of science being exploited by the wrong people is beautifully illustrated in Jurassic Park.

Edited October 4, 2011 by nmarks

[numpty]

None the bloody wiser

[Game_Over]

Name a single politician who really understands derivatives as practised by Wall Street. The idea that Blair. Brown or Cameron were running this show is laughable.

No- the banksters thought they had discovered the philosophers stone of risk elimination- and blew themselves up- just like every other damn fool who thought he could turn lead into gold,

Most people don't understand how microprocessors work - but that doesn't stop them using computers.

Politicians removed regulation from financial markets and let the system rip.

They then took the credit for delivering perpetual growth and ending boom and bust

When the inevitable happened, politicians then paid bankers to take the blame.

Until you can get your head around this simple fact - you will never really understand what is happening.

[Guillotine]

Coffin for sale. Call Goldman now.

Bones for sale. Call RBS now.

[wonderpup]

Politicians removed regulation from financial markets and let the system rip.

I'm not even sure we disagree- I say bankers are a bunch of irresponsible greedy morons, you say that without adult supervision they went mad and lent to anything with a pulse- is there a difference?

So even if we ignore the hundreds of millions the bankers spent on lobbying for deregulation, the simple absence of enforcement does not in itself negate the moral requirement to behave correctly- if it did then the absence of a policeman at the scene of the crime would be a valid defence in law.

I just don't share you view of the Bankers as the happy go lucky victims of a loose regulatory environment- the reality is that calculations were made as to the likelyhood of state bailouts in extremis, and bets were placed with this backstop in mind.

For example it's fairly obvious that the banks that lent money to Greece were fairly confident it would be German taxpayers picking up the pieces if anything went wrong- so a deeply cynical bet was made on Greece being 'too big to fail'- a bet that may not in this case come off.