From the New Indian Express, techies expressing their disappointment in Pranobda's budget - "...the budget failed to address their [s/w engineers] primary concern - to create jobs, like the increase in NREGS ... which will create direct jobs"
To which I say Bravo! We could recreate Windows, and then fill it in again. Idiots!
“As long as the music is playing, you’ve got to get up and dance,” Charles Prince, CEO, Citigroup, 2007.
In a sense that one, pithy, statement neatly sums up the tragedy of the financial meltdown that we've witnessed over the past two years. Having lived, quite literally, through the penning of a new chapter of History, the first assessments of what went wrong during the Summer and Fall of 2008 are emerging. Fool's Gold by Gillian Tett, assistant editor at the Financial Times, is one such example. I managed to corral Pramod's (signed!) copy of the book, before he returned to the UK.
After having read so much about the crisis over the past couple of years (The Economist, FT, WSJ, NYT, the list is endless), I was under the impression that there wouldn't be much new to learn from this book. Having taken just two days to run through it, you can guess that I was totally off the mark! The book provides an interesting vantage point to understand the crisis - from the offices of J. P. Morgan, the commercial bank, where much of the technology that helped to create the Credit Crunch was itself invented. At a gross level, the book is not so much about the implications and the motivations of the bankers whose rapacious greed has radically reshaped the financial system, but focused more intently on those "Financial weapons of mass destruction," credit derivatives.
In order to understand a new technology, it is usually useful to understand the historical motivations of the designers of the technology - the problem they hoped to solve, their approach to solving it, the compromises they made in finding a solution. Fool's Gold provides this perspective in spades. The notion of credit derivatives emerged at J. P. Morgan in the mid-nineties. The idea was to create a derivative instrument that helped to push risk off of J. P. Morgan's balance sheet to someone else who was willing to take on the risk of holding the debt on their books. The team designed such a product for corporate debt instruments, which proved very successful. Essentially, they created a Credit Default Swap. However, the swaps were legally complicated and cumbersome, and since they needed to be concluded anew between two parties separately for each new swap contract, the J. P. Morgan team came up with a way of "industrializing" the swap creation process - the Collateralized Debt Obligation. Gillian Tett expertly takes the reader through the process by which these instruments were engineered. This is the book that you should read to understand the financial technology that lead to todays malaise.
What the J. P. Morgan team found when they tried to use the same technology to sell mortgage risk, was that it was impossible to justify the ratings of the CDS contracts, given the lack of data to accurately assess the behavior of the contract under distress. Given this, J. P. Morgan sold only one mortgage-backed CDS contract, and decided to stay away from the whole mortgage-backed security (MBS) market. However, this didn't prevent other people from taking this idea and running wild with it. In fact, J. P. Morgan could be said to be mildly culpable, since, while they were happy to disseminate their creation to the wider financial world, they did not accurately portray the risks involved in the creation and selling of MBS's, despite knowing them. And this is probably the greatest weakness in this excellent book - J. P. Morgan comes out too easily as a bit of a shining knight. A little more skepticism of their motivations might've been useful - but then again, that might just be me fluttering in the prevailing wind, given the current disgust with bankers.
Where this book falls short is the overt focus on J. P. Morgan. I hope that this is but a first installment in a series of books assessing the credit crunch. The questions that I would love to read Ms. Tett explain, in any subsequent books, include -
1. What was the role of the ratings agencies, in all of this? They come out unscathed in Fool's Gold - which I find implausible. How did they manage to rate tranches of instruments like CDO-squared and CDO's of Mezzanine ABS, as essentially risk-free, when they clearly weren't? What of their incentive structure - why is it that the people paying the ratings agencies are the companies issuing the debt instruments, and not the buyers of the debt?
2. Why was there no clearing house or exchange created for credit derivatives? Why were most of these instruments being created and transacted between two parties in the dark? Especially since, increasingly, these instruments are being sold to uninformed investors?
3. The incentive structure for bankers - what made them get down and dirty, just because others were too? Why did they have to dance the dance? What happened to their rationality, in the face of gross market distortions?
4. Why were more and more complex instruments created, without the implications of these instruments being fully understood? Why was there an almost stupidly evangelical faith in mathematical models?
Of course, not all of these questions can be answered in one book. But, I hope that this is just a beginning by Ms. Tett, for she has the ability to explain complex financial mumbo-jumbo in rather simple terms. At the end of the book, one is left craving more information on the policy drama of September and October of 2008 - for instance, why Lehman Brothers was allowed to fail, but AIG not (all within a few hours of each other) isn't touched upon at all. Having said that, this is still a very powerful, cogent, account of the beginnings of the most recent chapter in History, and one that must be read to get a foundation on which to understand the wider implications of the Credit Crunch. Highly Recommended.
I've always wanted a mobile internet connection, but I always assumed that it would be completely rubbish on GPRS. But, I finally sprang for airtel's GPRS connection, and while it's definitely not the fastest connection, it is a very liberating experience. So here I am waiting for my grandmom to finish her work at the bank, and I, for a change, have something to mess around with. Heh, I can still ponder the potential juiciness of 3G though.
I'm a murderer. Well, let me change that to inadvertent assassin. You see, I like to make notes on and annotate papers that I read. And since much of my life is consumed reading research papers, I print papers rather indiscriminately (of course, the fact that my office has a laser printer doesn't hurt. But, that changes tomorrow). That's a whole lot of trees dead across the world. I didn't mean to kill them, but it was inevitable.
So you can see that the solution would be simple enough - notes and annotations in PDF's and PS's. For some reason Adobe refuses to add this feature of their basic Acrobat Reader. Anyway, for a while now, I've ditched Adobe and its Stalinist attitude for Skim, a free PDF reader and note taker for Mac OS X. Skim is far, far more refined and user friendly than Acrobat Reader. Notes can be added anywhere, floating or anchored, through out the text. You can also highlight, underline, strike-out and circle interesting text. There is also a search function to sift through your notes (which can grow exponentially). All in all an extremely useful application.
Occasionally I also find myself reading PDF's in Linux (I have a virtual machine set up to run simulations, but that's another post), and I've found Okular to be nearly just as good. Not as refined as Skim, but very, very useful nonetheless.
I've started cross-posting to a new WordPress blog called Entropium, with the hope of eventually moving my blogging there. I've been blown away by WP's blogging tools, the interface and general ease of use. However, the primary motivation for setting up there is because I've also started a more technical blog called Minimal Descriptions. Since I will be starting my Ph.D. studies this Fall (contingent on a student visa), I'll be posting most of what I'm currently reading and trying to understand, to have a constant feel for writing formally. Expect mildly stilted language :) The reason for choosing WP is its nice integration of LaTex and bibTex, since I expect to be typing stuff with equations and citations.
You remember Hank, the guy from Me, Myself and Irene? No, not the trooper, the other guy with the ginormous...rage. Well, take him, add some politics, some government, some news hacks, toady civil servants, gutless politicians and loads of hilariously compromising positions, and you get the BBC comedy series The Thick of It, an utterly fantastic satirical political comedy.
This is probably the most hilarious comedy I've ever watched. Good comedy always has tons of narcissism, jealousy, self-centeredness and simple bloody mindedness - think George Costanza, Larry David and Basil Fawlty. By God, does The Thick of It have it! This series is so funny it's painful, and so painful to watch, it's funny. Armando Ianucci, the creator of the series, has the characters, the situations, the jokes, everything just spot on. I like mockumentary-type comedies like The Office, but this one takes the cake. The main character is the shamelessly manipulative, thoroughly cynical Malcolm Tucker, based on Alastair Campbell, Tony Blair's former Director of Communications and Strategy. Through out the series, Malcolm intimidates the politico's and the babu's equally, to manipulate government policy to where he thinks it should go, damn the consequences. At the receiving end, usually, is the Secretary of State for the Department of Social Affairs (DoSA, haha), Hugh Abbott, who is the epitome of ministerial narcissism, interminably insecure about this position in the cabinet. Case in point, this roasting by Malcolm for giving an interview to the Daily Mail without informing Malcolm,
As you can see, the language is unhindered. And it all fits perfectly and in a strange way not gratuitous. For instance, Jamie, Malcolm's assistant, excuses himself to get past a bystanding cleaning lady, after a marathon swear session. Having said that, I wouldn't watch this in Starbucks, over free internet, without headphones.
This is definitely not "Yes Minister". It's so much better. And there's a movie out now, called In The Loop, directed and written by Armando Ianucci. Sadly, I don't think we'll ever see it here in India. Oh, and while I'm plugging it, The Thick of It is on YouTube right now, all the episodes :)
I think Pramod Mutalik and his merry band have it right. They are correct, we need to ghettoize our nation. Damn it, how dare we all, of different religions and denominations, mix together destroying the purity of our souls? But, I think they don't go far enough. Oh no, not by a mile. Let's go the whole hog while we're at it, I say. Let's ghettoize ourselves into one man islands. I live my life, and you, you mind your own business. It seems the only logical end, no?
Feb. 4th, 2009 @ 09:56 am
After a day pondering it I finally figured out what I found totally strange about "Jai Ho", the song during the credits in Danny Boyle's film, "Slumdog Millionaire" - the characters don't sing it to each other! They just...dance. This is wrong! Heresy! And this is why hamara Baalyvood is better I say - we know how to put our mouths where our feet are at.
... like this make me want to weep, laugh and rant at the same time.
Sample this from a Guardian blog post, about Asian cinema taking over the world - "China aims to make cinema as important as its internet and telecoms industries; box-office receipts there increased by 27 per cent in 2007 alone."
What does the heck does this sentence mean? How does China "decide" to make cinema important? Is there a central committee there making these decisions (heh, there maybe, though)? It's cinema for crying out loud! You can't just "aim" to increase the importance of cinema - it's not like building roads! You make films because there are subjects to explore and people want to watch them. If Chinese cinematographers make movies people like, then Chinese cinemas importance will increase; not because the Central Chinese Movie Command has decreed that cinema will "take the place of toys on the list of exports from China."
Jan. 19th, 2009 @ 09:29 pm
The last few days have been the most distressing and depressing, compounded by confusion. Confusion over myriad questions. How could this have happened? Why us? Where are our leaders? Do we have any leaders? What can I do? What can I do? The most depressing sight was the juxtaposition of the men who went in to flush out those remorseless killers - "Theirs not to reason why, theirs but to do and die" - and our sad, pathetic, infinitesimally small politicians - not a leader amongst them.
India's 9/11 people have said. But 9/11 in what sense? If in the sense of a devastating attack on a nation, then we've had many of those. Many that we have mourned and then forgotten, perhaps because it happened to "someone else", perhaps of the anonymity of the assailant, cowardly placing a bomb and riding away to watch the carnage on the news. If one means a 9/11 that jolts us as a people out of our seats, especially those of us most comfortable, then I agree this is our 9/11. The thought that depresses me the most, though, is that we might, nay will, forget this and go back to our old ways. That this moment of grief and resolve will dissolve with nary a trace. That we will shout and rave and rant, light candles and then like the flame in that candle, the resolve will go out.
I hope that I am proved wrong. Proved to be a cynical fool, who deserves to be shamed by the actions of his fellow citizens. Actions that do not have to be dramatic, do not have to be terrorist busting. Even the smallest thing. I hope to make that change in my life - to be that bit better. I don't know yet what that might be. Something I must figure out for myself, just as it is a conundrum for each of us.
We had a leader once - "a half-naked fakir" was how Chruchill described him. Someone who's despised by many of us, turned into a facsimile, by pop-culture "gandhi-giri". Fakir or not, facsimile or not, he showed us a path to freedom - not merely from the yoke of colonialism, but from the strife within our minds, from the self-defeating divisions we raise between ourselves. Today, as I think of what I can do, nothing strikes me to be more relevant than one of the many small tenets that he left us to ponder over - "You must be the change you wish to see in the world." He may not be with us, but he has left us the tools to forge the path we may wish to take. I hope that we will all be the change we wish to see.
Let us never forget the brave men of the N.S.G. and the Mumbai Police, the men and women who were the staff at the Oberoi and the Taj, and the scores who died because their number came up in a strange and despicable lottery of death.
Dec. 1st, 2008 @ 10:10 am
I've missed out a few of the Economist issues recently. Luckily, google-ing on the book "The Subprime Solution" threw up a very recent article, by a risk-manager, about the current crisis and how it came about. It's a little complicated, with a lot of jargon, so a financial lexicon would be handy. Check it out - "Confessions of a risk manager."
One of the things I'm currently doing is to gather a lot of information about the subprime mess and how we got to this point. I'll be making some posts about what I'm reading currently. I'm starting off with a book about John Maynard Keynes. It appears to me that political expediency has lead to a Keynesian approach to solving the current credit crisis. Keynes believed in an active governmental role in the financial economy. This is in opposition to the Austrian school, and even the Monetarist belief of the Chicago school. (As a side note, it is my understanding that the Austrian school informs the Chicago school, but the monetarism necessarily requires that a central bank-like institution control the amount of money in the economy).
I think that we have reached an interesting inversion-point, with the diminishing of the monetarist approach to the financial economy, and a much more heavy handed, regulatory (perhaps even interventionist) approach by governments in controlling markets; indeed, a very interesting time to be learning about economics.
Oct. 2nd, 2008 @ 10:45 pm
Lehman Brothers goes down in flames, leaving a very sanguinary scene on all the Streets around the world. How did this come about? Why did this happen? Weren't these guys supposed to be the geniuses who make the world go 'round? Sadly, this shouldn't be as shocking as it appears. The collapse of Long Term Capital Management (LTCM) should've been the wake up call for regulators and investors everywhere. Unfortunately, it was not. Roger Lowenstein, who's book - When Genius Failed - on the rise and precipitous fall of LTCM is a must read, has a very interesting article in the New York Times describing the fallacies and hubris that have lead us to the current situation. Also particularly prescient is this letter from the Oracle of Omaha, Warren Buffet, to Berkshire shareholders in 2002, describing derivatives and his rational for staying away from these, "financial weapons of mass destruction." (Note, you'll have to scroll to the end of the section titled "Derivatives").
My own two cents are this - there are many failures that are on display in the markets now. But of these, two stand out to me, both of which are at the heart of the problem. First up is the destruction of the basic moral predicates that modern finance and commerce are built upon. By lending to people who had no or limited means of repaying their loans, lenders, of all creed, jettisoned their moral obligation as bankers and became usurious loan sharks. By selling their loans on to other parties as derivative obligations, they hoped to rid themselves of the risk of being a lender, by any other name. But, when everyone is buying from everyone else, is there any doubt that we wouldn't have ended up here? The second failure is a more scientific one, and one that Roger Lowenstein states - that of an excessive, even servile, belief in models. Mathematical models by definition are predicated upon simplifying assumptions, that make the mathematics tractable. Thus a model is not an exact replica of the real world, but a noisy reflection of it, that is good within a bound (if a terribly loose one), and is convergent (if at all) only in an asymptotic sense. By forgetting this, banks have betted their existence away.
Having said this, I am still sanguine about the entire situation. By allowing Lehman to fail, the Fed has probably prevented a "moral hazard", where by market players assume that there is no risk that the government won't guarantee, thus encouraging even more risk-taking. Some blood-letting now should keep the world in good stead for the future. Further, the events of this weekend are probably cathartic and might provide relief from the state of suspended animation that the markets have been in for over a year now. However, these particular woods haven't been crossed yet, and it begs the question - who next?
Sep. 15th, 2008 @ 09:55 pm
So, Singur again. Just when it appeared that the dust had settled, once more the air is riled. Leaving aside Mamata Banerjee's obvious political rapaciousness, I wonder if there is something genuine in these protests. I would imagine that some of the people protesting are doing so out of genuine distrust of the entire process of land acquisition. With the mainstream media being what it is, one can only conjecture - and so I shall throw my own proverbial 2-paise worth into this particular well of political rhetoric and recrimination.
It appears to me that there are at least 2 reasons for these protests (and all over India, re. SEZ's) -
a) Money and its worth to people. b) Identity and its worth to people.
What is the longest that any white good has survived your daily abuses? Think, think. Ponder for a moment. 2 years? 5 years? 10 years? I remember my Moms old Bosch washing machine. We had it during those halcyon years when we lived in 'hospital quarters'. It survived the trip over the oceans here. Heck, we even used it in my Grandmom's house - 7, occasionally more, people. It never broke down. Well, once we did have to replace a pipe somewhere, but no biggie. All added up we must've used the thing for at least 18 years. I thought that was the best you could extract from a machine. I mean, Hans had done one heck of a job screwing it together.
But, Mom's Panasonic Dimension 4 microwave beats the washing machine hands down. I remember going to the shop to buy the thing, in 1985/86. It too made the trip over the seas. I have to admit, though, that there was a hiatus of about 3 years when we didn't use it all. Realistically though, we use the mju-wave at least 15 times during the day...there I just did again, for some hot water. So, with all the door banging, starting, stopping, you'd think that something would've given up by now. The touch sensitive key-pad (yes, it really does have those!) should've worn out some what - but not a thing. Rust, you say? Not a hint of it, and it sits next a water 'pot' with lots of water being splashed about. The magnetron - still ticking along. In fact, the only thing I can remember being replaced is the bulb that lights up when you open the door. But come on, once in 24 years?! Every time I slam the shut the door, it clicks into place with a satisfying clunk. Never misses a beat.
I could also go on like this about the Fridge, early '90's vintage, that's still running (though I suspect it's pretty energy inefficient). But, the thing is, I haven't seen any thing like these machines recently. I can't recall a single thing I've bought that has the same quality and finish. Built like a tank? Like a Dimension 4, more like!
All of this raises the question, why are things so iffy today? We bought a microwave for my Grandma a couple of years ago. The door doesn't line up with the time-entry panel when you shut it. And there's no satisfying thunk when you shut the door. Overall, it's a very iffy product. Ditto with the microwave I had in my apartment. And it's not just microwaves, the TV at home - the plastic casing is so bleeh, the paint on the remote has worn out - and it's barely 8 years old. I could go on and on with examples like these. One of the great claims of globalization is that it has reduced the cost of buying things - the great deflation it's called. But, perhaps, things are cheap because, well, they're cheap.
A final note - the Dimension 4 faltered ever so lightly today. When I switched it on to heat some water, the magnetron didn't fire up as usual. Poor voltage? I should hope so; if it kicked the bucket I would be pretty depressed about it. Fight on, ol' fella!
Feb. 29th, 2008 @ 11:15 pm
Book 7 is out this weekend. Very tempted to jump in and flash the plastic, but something tells me I know the ending to this one - Volde' dies (obvi), Harry dies (kill him, KILL HIM!!), Ron and Hermione marry (duh) and the world lives happily ever after. Not sure if I want to slog through 749 784 pages, just for the inevitable ending. Yet, what if I'm wrong?
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Too lazy to write up book reviews, but it's been a little slack in the old cubicle, so here's what I've read over the past 2 weeks with a short blurb and binary (read/no-read) rating:
1. Pascal's Wager - A short and mildly hacky biography of Blaise Pascal - no-read (unless you're a pop-sci junkie).
So, it's a usual day at work. I'm browsing the New York Times website, and I come across David Pogue's latest wacky video posting about a neat little program called Delicious Library, that lets you catalogue all the books, videos, music and games that you have. An Excel sheet should do, you say? Not if you have to enter the information manually (of course, if you have a band of leprechaun minions, it's a different story). The beauty of DL is that - drum roll - it lets you download the information from Amazon.com, by simply scanning the barcode on the back of your book/CD/DVD with an iSight camera! Just like in the store :) And it even makes the beeping sound!!
I got home and downloaded a copy and the shareware lets you put in 25 items - after which I shelled out the $40 (okay, a little on the high side) and man was it worth it! How many times have you lent a book and then lost track of it, and one day some else lends it back to you?! Well, DL lets you "check out" books to people in your contact list and even puts a reminder in your iCal for the return day! How cool is that?! Better still, if you can't enter via iSight, you can read out the name and it automatically downloads the information from Amazon.com.
Entering stuff was actually pretty fun, atleast for a while. The only times the barcode scanner failed was when the barcode was faded/book was bought in India/book too old to have a barcode. I haven't tried the voice recog. yet, but it should be a snap to use. If the barcode scan fails, you can also enter the ISBN manually, and search for the information and add it to your library. In all, a neat little piece of software, that really does simplify things. Check it out at Delicious Library.
PS: Oh, yeah. It's Mac only :)
Jul. 12th, 2007 @ 03:06 pm
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