Nothing against the Indian firms and workers. they are cashing in on under-cutting US workers, and the brazenness and effrontery of the thieves who call themselves "globalists" and "worldclass" lean and mean firms is amazing.
As long as the US worker believes trundling down to the unemployment office and tossing a teabag or two is sufficient, he or she will continue down the path of firing, foreclosure, homeless shelter, gutter and then a "green ending": the biomass from the deceased starved will be offshored also and "recycled" asnd sold as a green product in some McGreenburger or something.
Apologies to fans of "Soylent Green" and works of Phillip K. Dick who warned us of theses scenarios years ago.
"And then he told of the banking industry's indignation at being made to account for itself. It regarded the outraged public, in Pecora's shorthand, as a "howling mob.""
I fear these things are very much at odds with one another- it reminds me of the early Federalist fear of "tyranny of the majority". Centralized power is the problem, whether you're talking Marx or Smith.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
Is an absurdly small amount to patch what was originally described as a $650 trillion hole?
Oh, and when you're extreme, the middle often looks to be the other side. Likewise, when your predecessor was extremely incompetent, any competence on your part, even in the wrong direction, will look like victory.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
From physics, there is something called standing waves. They can reinforce each other and create a monster wave.
I think NDD has really looked into business cycles and might be able to shed more light, but as I understand it, the original intent of regulation, Keynesian economics, even socialism was to minimize those economic cycles.
But our lovely predators want those wave peaks so they can make out like bandits.
That an efficient market is impossible outside a homogeneous population of less than 500 human beings with the same ethical belief system or religion.
As soon as you have ONE actor who is anonymous or does not follow that ethical belief system or religion, and holds values counter to the rest, the inevitable distortions in price that we see with any fraudulent deal will appear.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
We need a constitutional amendment to replace this as a part of any new captialist manifesto- specifically on trade treaties and individual state currency, and perhaps something on chartering corporations being limited to a state as well (no more respecting the laws of other states, the way the Supreme Court destroyed usury laws). #1, #2, and #3 are all caused by the United States of America becoming the Federated States of America- an experiment in free trade that I believe has failed.
When it comes to economic systems, the dream of Marx & Smith has indeed failed. Nations are simply too big, and international free trade has been nothing but a disaster for the majority of the people involved. There should be no reason for Congress to get involved in say, a tariff trade swap between Oregon and Idaho, but because of Article I Section 10, such protectionism is impossible, and thus a financial sector centered in a single city 3000 miles away gains power. That's completely illogical, and I say, detrimental to both Oregon and Idaho.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
then it is absolutely important to have a strong middle class. If we want sustainable growth and not these violent boom/bust cycles than a strong middle class is essential.
Is there a wave theory that says the more frequent cycles the more intense the amplitude?
1970s - oil shock
1980s - International debt crisis
1990s - internet bubble
2000s - credit bubble
These shocks are coming more frequent and possibly more damaging.
It's really true and these predators also pay enormous sums to leave a swath of public relations, marketing psuedoscience rhetoric to hide what anyone driving through pretty much any town in the United States can plainly see....the destruction of the U.S. middle class.
I also hypothesize, and I believe history, theory as well as the data backs this up....when one destroys a nation's middle class, invariably they destroy the nation and it's entire economy.
was even valid. I just wrote down some Philosophy 101 logic statements in the last comment.
What constituents a science is the scientific method and that does include mathematics and modeling.
One of the basic laws of supply and demand came from a Muslim economist in the 12th century. i.e. not "the physical sciences".
When one builds a model, they are not using vague, philosophical assumptions for validation. They are using historical results, that's real world information, real world data, experimentation to validate or invalidate the model.
That statement on model validation is so FUBAR I just don't know where to start. I'll say this, it appears you negated your own tautology.
Now that they decimated the entire middle class and economy...all that is left is for the U.S. dollar to collapse so they can further realize their "cost savings" by labor exploitation.
Well, one thing is assured, Ireland is in deep dodo so I don't think those free trade policies (outsourcing is not within the realm of the real trade theory, just a bunch of exploiters try to make it seem so due to their own financial interests) are workin' out too well.
Here is something I have heard repeatedly from executives in a decision to outsource to Ireland and that is health care costs. They save a good 30% just on that because our health care costs are so high for employers.
I worked in Ireland for a few months. It was like a mini Silicon Valley. Lots of new outsourcing projects are not going to India, they are going to other markets like the Philippines and Argentina. This has started because of lack of a skilled and stable labor pool plus the costs of telecommunications in India. The Indian terrorist incident also helped accelerate the movement since India is not a safe place to outsource.
I read an article last week that America is one of the best rated places to Outsource to.
A is a member of B does not imply B is a member of A.
The sky is blue in California on Wednesday does not imply the sky is blue for all time, around the world.
A flawed mathematical model does not imply all mathematical models are flawed.
A branch of mathematics does not imply all economic theory.
You have a serious logic problem going on.
and I'm kind of sick of it. Look, not only is EP an "all things economics" community site, but we are also a reality based site.
So, trying to push some assumption that all mathematical models are bad and all economic theory is wrong just is not going to fly on EP because that is a belief.
If you wish to proof it....well, ya kind of need some data, mathematics and facts. (oopsy!)
Once again Li was an Actuarial Science PhD and worked in structured finance. That is not the same as having a PhD in say Macro Economics or International Economics or labor economics.
Also Li was working at a company who had a vested financial interest to quickly be able to evaluate risk of CDOs.
There are mathematical models and then there is poor interpretation, wrong application, or not understanding the limits of those various models.
One can take trade theory as an example and it will clearly show offshore outsourcing will harm America. Gomory and Baumol's entire second half of their book is nothing but mathematics. They show clearly that free trade is not always a "win-win", especially when one allows certain variables, such as labor supply to not be static (tradable).
The entire first half of the book is written for lay people, those who are mathematics illiterate, where they describe their findings...but those findings are from the mathematical models.
Paul Samuelson also proved this to be the case with a simply use of the trade theory model, bi-variate and he just tweaked a couple of variables.
So to sum:
Economists who use mathematics does not imply that Economist is a Neoconservative.
Classical Economics do not imply one is in the Hayek school.
An equal sign does not imply the broad concept of equilibrium.
... did not come originally from data in economics, they are borrowed from the physical sciences.
Its not the presence or absence of mathematical modeling that makes a field of study a science, its the effort to provide cause and effect explanations of what is happening.
I apologize in advance if "try to provide cause and effect explanations" is an excessively obscure philosophical concept.
And, yes, econometrics is quite certainly about validating the application of mathematical models with mathematical models and heavy use of statistics, where the statistics alone would not validate the model. The rationalization within econometrics is that it is "knowledge about the working of the economy" that is being added to the statistics, but that then begs the question, since if you incorporate the underlying assumptions of your model when validating an application of the model, the underlying assumptions are not longer subject to being invalidated by the statistical analysis.
"Bad math does not imply all evil lies at some very misunderstood concept, such as what equilibrium actually means.
Again, equilibrium is not the issue I see. It is the correlation coefficient properties and how CDS swaps do not possess those required mathematical properties."
I don't follow what this is trying to say. What equilibrium "actually means" in mainstream economics is that two equations derived from optimizing models are set equal so that you can solve for price and quantity.
You are saying that Li's mathematical model is built on assumptions which are not the same as the actual properties of the transactions being modeled. In other words, you are saying that Li worked like a mainstream economist.
The most common problem that crops up in mainstream economic theory ... and in mainstream economics, theory is identically equal to mathematical modeling ... is not that important real world relationships are misunderstood, but rather that they are not compatible with the modeling techniques in the toolkit and so must be replaced with a proxy.
And those same mathematical models must be mastered in order to gain most graduate degrees in finance.
Early in the years of IT outsourcing, Ireland was the place that companies went to. Like India, they didn't have a strong IT presence but they had people who would work cheaply. They also had people who spoke English as their native language (something India doesn't have, despite what the press believes). As more work went there, the relatively small workforce was taken up quickly and salaries increased in response. Eventually, the labor arbitrage broke down because it was no longer cheaper to move work there. They were used by the global corporations.
This is the same thing that will eventually happen to India. India has the advantage that they have many more people, but only a small percentage of them have the education, knowledge and literacy to do the work. At some point, the costs of these people will increase such that it will be cheaper to send the work to another country. Unfortunately, most of the jobs won't come back to the US. They'll end up in places like Viet Nam or China.
So I read, "There are few suppliers who match credentials and outcomes of Indian firms,” he said."
Allow me to cut through their double speak, "There are few suppliers who match the low labor rate and lower cost of Indian firms."
I am sure they are thinking, all will be well if we can just get the credit market flowing again, blow up that credit bubble so the consumer driven society can again, start buying.
We have pumped gazillions into these banks. None have failed the "stress tests" ... and yet none have returned the TARP funds either.
Which one is it guys?
Nothing against the Indian firms and workers. they are cashing in on under-cutting US workers, and the brazenness and effrontery of the thieves who call themselves "globalists" and "worldclass" lean and mean firms is amazing.
As long as the US worker believes trundling down to the unemployment office and tossing a teabag or two is sufficient, he or she will continue down the path of firing, foreclosure, homeless shelter, gutter and then a "green ending": the biomass from the deceased starved will be offshored also and "recycled" asnd sold as a green product in some McGreenburger or something.
Apologies to fans of "Soylent Green" and works of Phillip K. Dick who warned us of theses scenarios years ago.
Oh ho hum, they all will just get all in a flurry about those socialists or say at best executive pay.
It is an amazingly outrageous post and the idea that just two of the Zombie banks being exposed as insolvent would shut down the FDIC is incredible!
Can't get anybody excited about banksters anymore
It has always been about class warfare.
"And then he told of the banking industry's indignation at being made to account for itself. It regarded the outraged public, in Pecora's shorthand, as a "howling mob.""
I fear these things are very much at odds with one another- it reminds me of the early Federalist fear of "tyranny of the majority". Centralized power is the problem, whether you're talking Marx or Smith.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
Is an absurdly small amount to patch what was originally described as a $650 trillion hole?
Oh, and when you're extreme, the middle often looks to be the other side. Likewise, when your predecessor was extremely incompetent, any competence on your part, even in the wrong direction, will look like victory.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
From physics, there is something called standing waves. They can reinforce each other and create a monster wave.
I think NDD has really looked into business cycles and might be able to shed more light, but as I understand it, the original intent of regulation, Keynesian economics, even socialism was to minimize those economic cycles.
But our lovely predators want those wave peaks so they can make out like bandits.
That an efficient market is impossible outside a homogeneous population of less than 500 human beings with the same ethical belief system or religion.
As soon as you have ONE actor who is anonymous or does not follow that ethical belief system or religion, and holds values counter to the rest, the inevitable distortions in price that we see with any fraudulent deal will appear.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
We need a constitutional amendment to replace this as a part of any new captialist manifesto- specifically on trade treaties and individual state currency, and perhaps something on chartering corporations being limited to a state as well (no more respecting the laws of other states, the way the Supreme Court destroyed usury laws). #1, #2, and #3 are all caused by the United States of America becoming the Federated States of America- an experiment in free trade that I believe has failed.
When it comes to economic systems, the dream of Marx & Smith has indeed failed. Nations are simply too big, and international free trade has been nothing but a disaster for the majority of the people involved. There should be no reason for Congress to get involved in say, a tariff trade swap between Oregon and Idaho, but because of Article I Section 10, such protectionism is impossible, and thus a financial sector centered in a single city 3000 miles away gains power. That's completely illogical, and I say, detrimental to both Oregon and Idaho.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
then it is absolutely important to have a strong middle class. If we want sustainable growth and not these violent boom/bust cycles than a strong middle class is essential.
Is there a wave theory that says the more frequent cycles the more intense the amplitude?
1970s - oil shock
1980s - International debt crisis
1990s - internet bubble
2000s - credit bubble
These shocks are coming more frequent and possibly more damaging.
It's really true and these predators also pay enormous sums to leave a swath of public relations, marketing psuedoscience rhetoric to hide what anyone driving through pretty much any town in the United States can plainly see....the destruction of the U.S. middle class.
I also hypothesize, and I believe history, theory as well as the data backs this up....when one destroys a nation's middle class, invariably they destroy the nation and it's entire economy.
i.e. the Federal Reserve and the U.S. Treasury.
Ya know, I saw the people giving Obama "high marks" on the first 100 days on the economy.
Is America stupid or is polling pure fiction?
Seriously.
That is an astounding number. It seems to imply U.S. citizens are now enslaved just to feed the Zombie banks.
I'll shut up now and go get my own blood pressure medication refilled.
was even valid. I just wrote down some Philosophy 101 logic statements in the last comment.
What constituents a science is the scientific method and that does include mathematics and modeling.
One of the basic laws of supply and demand came from a Muslim economist in the 12th century. i.e. not "the physical sciences".
When one builds a model, they are not using vague, philosophical assumptions for validation. They are using historical results, that's real world information, real world data, experimentation to validate or invalidate the model.
That statement on model validation is so FUBAR I just don't know where to start. I'll say this, it appears you negated your own tautology.
Now that they decimated the entire middle class and economy...all that is left is for the U.S. dollar to collapse so they can further realize their "cost savings" by labor exploitation.
Well, one thing is assured, Ireland is in deep dodo so I don't think those free trade policies (outsourcing is not within the realm of the real trade theory, just a bunch of exploiters try to make it seem so due to their own financial interests) are workin' out too well.
Here is something I have heard repeatedly from executives in a decision to outsource to Ireland and that is health care costs. They save a good 30% just on that because our health care costs are so high for employers.
I worked in Ireland for a few months. It was like a mini Silicon Valley. Lots of new outsourcing projects are not going to India, they are going to other markets like the Philippines and Argentina. This has started because of lack of a skilled and stable labor pool plus the costs of telecommunications in India. The Indian terrorist incident also helped accelerate the movement since India is not a safe place to outsource.
I read an article last week that America is one of the best rated places to Outsource to.
A is a member of B does not imply B is a member of A.
The sky is blue in California on Wednesday does not imply the sky is blue for all time, around the world.
A flawed mathematical model does not imply all mathematical models are flawed.
A branch of mathematics does not imply all economic theory.
You have a serious logic problem going on.
and I'm kind of sick of it. Look, not only is EP an "all things economics" community site, but we are also a reality based site.
So, trying to push some assumption that all mathematical models are bad and all economic theory is wrong just is not going to fly on EP because that is a belief.
If you wish to proof it....well, ya kind of need some data, mathematics and facts. (oopsy!)
Once again Li was an Actuarial Science PhD and worked in structured finance. That is not the same as having a PhD in say Macro Economics or International Economics or labor economics.
Also Li was working at a company who had a vested financial interest to quickly be able to evaluate risk of CDOs.
There are mathematical models and then there is poor interpretation, wrong application, or not understanding the limits of those various models.
One can take trade theory as an example and it will clearly show offshore outsourcing will harm America. Gomory and Baumol's entire second half of their book is nothing but mathematics. They show clearly that free trade is not always a "win-win", especially when one allows certain variables, such as labor supply to not be static (tradable).
The entire first half of the book is written for lay people, those who are mathematics illiterate, where they describe their findings...but those findings are from the mathematical models.
Paul Samuelson also proved this to be the case with a simply use of the trade theory model, bi-variate and he just tweaked a couple of variables.
So to sum:
Economists who use mathematics does not imply that Economist is a Neoconservative.
Classical Economics do not imply one is in the Hayek school.
An equal sign does not imply the broad concept of equilibrium.
... did not come originally from data in economics, they are borrowed from the physical sciences.
Its not the presence or absence of mathematical modeling that makes a field of study a science, its the effort to provide cause and effect explanations of what is happening.
I apologize in advance if "try to provide cause and effect explanations" is an excessively obscure philosophical concept.
And, yes, econometrics is quite certainly about validating the application of mathematical models with mathematical models and heavy use of statistics, where the statistics alone would not validate the model. The rationalization within econometrics is that it is "knowledge about the working of the economy" that is being added to the statistics, but that then begs the question, since if you incorporate the underlying assumptions of your model when validating an application of the model, the underlying assumptions are not longer subject to being invalidated by the statistical analysis.
"Bad math does not imply all evil lies at some very misunderstood concept, such as what equilibrium actually means.
Again, equilibrium is not the issue I see. It is the correlation coefficient properties and how CDS swaps do not possess those required mathematical properties."
I don't follow what this is trying to say. What equilibrium "actually means" in mainstream economics is that two equations derived from optimizing models are set equal so that you can solve for price and quantity.
You are saying that Li's mathematical model is built on assumptions which are not the same as the actual properties of the transactions being modeled. In other words, you are saying that Li worked like a mainstream economist.
The most common problem that crops up in mainstream economic theory ... and in mainstream economics, theory is identically equal to mathematical modeling ... is not that important real world relationships are misunderstood, but rather that they are not compatible with the modeling techniques in the toolkit and so must be replaced with a proxy.
And those same mathematical models must be mastered in order to gain most graduate degrees in finance.
Early in the years of IT outsourcing, Ireland was the place that companies went to. Like India, they didn't have a strong IT presence but they had people who would work cheaply. They also had people who spoke English as their native language (something India doesn't have, despite what the press believes). As more work went there, the relatively small workforce was taken up quickly and salaries increased in response. Eventually, the labor arbitrage broke down because it was no longer cheaper to move work there. They were used by the global corporations.
This is the same thing that will eventually happen to India. India has the advantage that they have many more people, but only a small percentage of them have the education, knowledge and literacy to do the work. At some point, the costs of these people will increase such that it will be cheaper to send the work to another country. Unfortunately, most of the jobs won't come back to the US. They'll end up in places like Viet Nam or China.
So I read, "There are few suppliers who match credentials and outcomes of Indian firms,” he said."
Allow me to cut through their double speak, "There are few suppliers who match the low labor rate and lower cost of Indian firms."
I am sure they are thinking, all will be well if we can just get the credit market flowing again, blow up that credit bubble so the consumer driven society can again, start buying.
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