QOTD

Whether it's being done in honest ignorance, blind obedience, or cynical exploitation of the market, the result is the same: our ability to envision new solutions to the latest challenges is stunted by a dependence on market-driven and market-compatible answers.

-- Douglas Rushkoff

From Economics is not Natural Science. An interesting article arguing that our current economy is derived from an archaic set of man-made rules designed to serve particular interests. Rushkoff calls for consideration of alternative models (not based on scarcity, competition and centralisation) rather than assuming the status quo.

Why did the Government give Gerry my money?

“I’ve been in business since 1961 and I’ve never seen this sort of sales decline,” Harvey said. “I don’t know what we would do if we didn’t have Australia growing to make up for it.”

From Harvey Norman to ‘Persist’ in Ireland Amid Mounting Losses

"It is worth noting that the sector least affected (i.e. with little change in hours worked) is retail, no doubt buoyed by the Government cash packages," the report notes.

From 'Armageddon' averted but recession still likely: NAB

If I recall correctly, the first Government 'stimulus' payment was made just before Christmas, in time for the peak retail period and before the effects of the global financial situation were really being felt by the general population.

The Chinese Equity Bubble: Ready to Burst

Amid the current financial crisis, there has been one equity index beating all others: the Shanghai Composite. Our analysis of this main Chinese equity index shows clear signatures of a bubble build up and we go on to predict its most likely crash date: July 17-27, 2009 (20%/80% quantile confidence interval).

From this paper.

Only a few days to go before that time period is up! :-)

Commercial Uses: Going functional on exotic trades

A peak into how derivatives trading works at Barclay's and their supporting Haskell application.

QOTD

As we performed the work outside of a traditional it team, management was willing to take a risk on something that promised a good fit and rapid development process.

Abstract

The Functional Payout Framework, fpf, is a Haskell application that uses an embedded domain specific functional language to represent and process exotic financial derivatives. Whereas scripting languages for pricing exotic derivatives are common in banking, fpf uses multiple interpretations to not only price such trades, but also to analyse the scripts to provide lifecycle support and more. This paper discusses fpf in relation to the wider trading workflow, and our experiences in using a functional language in such a system as both an implementation language and a domain-specific language.

The paper is here.

Stanford Lawyer: interview with Charles T. Munger

I would argue that a majority of the horrors we face would not have happened if the accounting profession developed and enforced better accounting. They are way too liberal in providing the kind of accounting the financial promoters want. They've sold out, and they do not even realize that they've sold out.

Charles T. Munger, vice chairman of Berkshire Hathaway (Warren Buffet's company) in
Q&A: Legal Matters with Charles T. Munger

Assuming Charles' statement is correct, I don't think accounting is the only profession that has sold out to mediocrity, driven by commercial benefits to a minority, but to the overall detriment of society.

Patents can hinder innovation

Recently I was involved in a startup that after commencing discovered patents that they may be infringing. Basically, the owner of the patents had tried to setup a business and failed. Now however, the owner is in a position to profit (or recoup investment losses) if they could sell the patents, or alternatively bring a claim against the startup (or anyone else) once it launched.

My understanding is that the intention of patents is to foster innovation by granting a limited monopoly so as to encourage the investment required. However in this case, the patent holder has failed to bring their "innovative" idea to market and is stifling others in doing so by the risk of an infringement claim.

Similar issues are covered in Grove Says Patent System May Have Same Flaws as Derivativesand Former Chief Executive of Intel Believes Patent System Has to Be Altered.

My Manhattan Project - how I helped build the bomb that blew up Wall Street.

For those of us that consider job satisfaction in more ways than how well we do our job or how well we are paid, but also how does our work impact our world? Does it simply enrich some nameless shareholders, or does it do more?

Here is the story of Michael Osinski, a programmer that wrote software that turned mortgages into bonds. Somewhat relevant in the current "global economic crisis".

The original article, spread across multiple pages is here.