The story of philosophy begins at creation flows through Plato and Kant and culminates in the quantum revolution. The story of science goes on, of course, but physics has transcended the Platonic Forms, Kantian Categories, Hegelian Spirit, Humean Skepticism, Cartesian Dualism, Roussean Romanticism and so on.
Of course Sartrean existence is still relevant as we have still not penetrated the human condition scientifically.
Philosophy of course could reorganzie to become relevant again, but only as a handmaiden. Someone has to work on the implications of multiple dimensions, entanglement, interconnected fields, probability waves, vibrating strings, symmetry and so on...and hypothesize metaphysical implications..but only based on what we know through math and science.
When we combine the mathematics of particle physics, complexity and economics we have a foundation for philosophy based on all we know. Such a philosophy can show the way to a better world.
Yes we can.
Lee
Saturday, April 4, 2009
Monday, March 23, 2009
Matt Taibbi
It's refreshing when a reporter "gets it". In the current Rolling Stone, Taibbi portays the global financial crisis in the context of the AIG mess. He patiently dissects the complexities in an entertaining and educational way.
" A CDO (collateralized-debt obligation) is like a box full of diced-up assets...What the inventors of the CDO did is to divide up the box into groups...To get AAA ratings, the CDO's relied...on crazy mathematical formulas...
As banks and other investors of all kinds took on more and more in CDO's...they needed some way to hedge their massive bets..."
That's where AIG enters. They began selling Credit Default Swaps (CDS's) which insured the value of the CDO's. For a small premium relative to the potential risk, the CDS guarantees the insured asset.
The type of insured asset which became most prominent in the early 2000's was the mortgage. AIG guaranteed mortgages through their CDS's.
Because this activity had been essentially unregulated, AIG could sell an almost unlimited number of CDS's without any financial backup. As a result they exposed themselves to losses beyond the scope of their massive balance sheet.
Back to the mathematical models, it wan't supposed to happen. According to the models, CDO's and CDS's couldn't default at the rates they ultimately did. The models didn't take account of non-historical patterns, like a collapse of the U S housing market.
OOPS.
As Taibbi reports, the rest is history. AIG's debt rating fell requiring them to cough up assets as collateral at an alarming rate. Now the government is in the derivative business in an attempt to undo the mess.
Can we do it?
Yes we can.
Lee
" A CDO (collateralized-debt obligation) is like a box full of diced-up assets...What the inventors of the CDO did is to divide up the box into groups...To get AAA ratings, the CDO's relied...on crazy mathematical formulas...
As banks and other investors of all kinds took on more and more in CDO's...they needed some way to hedge their massive bets..."
That's where AIG enters. They began selling Credit Default Swaps (CDS's) which insured the value of the CDO's. For a small premium relative to the potential risk, the CDS guarantees the insured asset.
The type of insured asset which became most prominent in the early 2000's was the mortgage. AIG guaranteed mortgages through their CDS's.
Because this activity had been essentially unregulated, AIG could sell an almost unlimited number of CDS's without any financial backup. As a result they exposed themselves to losses beyond the scope of their massive balance sheet.
Back to the mathematical models, it wan't supposed to happen. According to the models, CDO's and CDS's couldn't default at the rates they ultimately did. The models didn't take account of non-historical patterns, like a collapse of the U S housing market.
OOPS.
As Taibbi reports, the rest is history. AIG's debt rating fell requiring them to cough up assets as collateral at an alarming rate. Now the government is in the derivative business in an attempt to undo the mess.
Can we do it?
Yes we can.
Lee
Thursday, March 19, 2009
The AIG Debacle
Rome is burning and our leaders are stumbling over each other about $150 million in bonuses. These are the same politicians who have quadrupled the federal deficit since 1980. Reagan and the two Bushes produced three times more deficit than all prior President's (yes going back to George Washington).
$150m million is 1/10% of $150 billion. Politicians no longer even read briefs on $150 billion in spending. Does anyone believe they really care about AIG's bonuses?
$150m million is 1/10% of $150 billion. Politicians no longer even read briefs on $150 billion in spending. Does anyone believe they really care about AIG's bonuses?
Tuesday, March 17, 2009
The $70 trillion question
What do you get when you have a $5 trillion spending agenda and a $65 trillion entitlement deficit?
The need for a very targeted stimulus. Basically, the $5 trillion has to revitalize the economy adequatey to pay off the $65 trillion entitlement deficit.
Oh, and maybe we should pay down some of the $10 trillion recently run up in Federal deficits. Then we can go to work on state and local unfunded debt.
Anyway it is clear the Stimulus has a lot of work to do. The models being used now to estimate impact have proven inadequate for decades. Only by incorporating advances from actuarial and complexity science will they have a chance of adequately targeting expentures to maximixze the multiplier effect over time.
Lee
The need for a very targeted stimulus. Basically, the $5 trillion has to revitalize the economy adequatey to pay off the $65 trillion entitlement deficit.
Oh, and maybe we should pay down some of the $10 trillion recently run up in Federal deficits. Then we can go to work on state and local unfunded debt.
Anyway it is clear the Stimulus has a lot of work to do. The models being used now to estimate impact have proven inadequate for decades. Only by incorporating advances from actuarial and complexity science will they have a chance of adequately targeting expentures to maximixze the multiplier effect over time.
Lee
Thursday, March 12, 2009
Holistic Stimulus
It all should be done at once.
The idea of stimulus spending is to stimulate economic growth. Does anyone believe that will happen if we just dump money into exisitng systems which are failing?
That's why the President wisely wants to reform healthcare, education, lobbying, earmarks, and other dimensions of spending simultaneously with stimuli and bailouts.
When 5% of $ 1 trillion goes to "healthcare", it can have $0 effect, $50 billion effect, or $500 billion effect. It all depends on the microfoundations.
Similarly with infrastructure, energy, science and welfare. When we talk about $4 trillion in total spending, how it flows will make the difference between nirvana and doomsday. We could end up with a collapsed, unsustainable economy or a vibrant, sustainable one.
The choice is ours.
Are we willing to invest in models which will show how flows can best be directed to produce a sustainable economy?
Yes we are.
Lee
The idea of stimulus spending is to stimulate economic growth. Does anyone believe that will happen if we just dump money into exisitng systems which are failing?
That's why the President wisely wants to reform healthcare, education, lobbying, earmarks, and other dimensions of spending simultaneously with stimuli and bailouts.
When 5% of $ 1 trillion goes to "healthcare", it can have $0 effect, $50 billion effect, or $500 billion effect. It all depends on the microfoundations.
Similarly with infrastructure, energy, science and welfare. When we talk about $4 trillion in total spending, how it flows will make the difference between nirvana and doomsday. We could end up with a collapsed, unsustainable economy or a vibrant, sustainable one.
The choice is ours.
Are we willing to invest in models which will show how flows can best be directed to produce a sustainable economy?
Yes we are.
Lee
Saturday, February 21, 2009
Transforming the Economy Sustainably
If we add $1 trillion to existing government spending, and allocate the existing spending in a way that stimulates, how much will the economy grow over time, and how sustainably?
While that is the question of the hour, all the kings horses and all the kings men have no answer.
That is tragic because the answer is blowin' in the wind.
Using complexity and actuarial science tools to supplement existing models, alternative ways of stimulating the economy could be tested before implementation. The ones most likely to succeed could be implemented and monitored and adjusted over time as needed.
That way, tables could be developed showing multiples of alternative allocations. One allocation might double GNP growth over five years while another might produce a 500% increase over three years.
Wouldn't it be refreshing to hear, "We have decided to add $1 trillion to existing spending for the purpose of transforming our tired economy. We have tested alternative approaches and decided on one which has a 95% chance of doubling GNP within three years. We will monitor the money and if it is not having the desired effect, will make adjustments.
We are confident this stimulus will transform our economy because we have tested it from the macro to the micro level. The money is targeted to industries and companies most likely to provide sustainable, transformative growth.
Our models are actuarially sound, demographically robust, temporally adjusted, interactively designed, and probability oriented. The money flow will be transparent and accounted for professionally."
Yes we can.
While that is the question of the hour, all the kings horses and all the kings men have no answer.
That is tragic because the answer is blowin' in the wind.
Using complexity and actuarial science tools to supplement existing models, alternative ways of stimulating the economy could be tested before implementation. The ones most likely to succeed could be implemented and monitored and adjusted over time as needed.
That way, tables could be developed showing multiples of alternative allocations. One allocation might double GNP growth over five years while another might produce a 500% increase over three years.
Wouldn't it be refreshing to hear, "We have decided to add $1 trillion to existing spending for the purpose of transforming our tired economy. We have tested alternative approaches and decided on one which has a 95% chance of doubling GNP within three years. We will monitor the money and if it is not having the desired effect, will make adjustments.
We are confident this stimulus will transform our economy because we have tested it from the macro to the micro level. The money is targeted to industries and companies most likely to provide sustainable, transformative growth.
Our models are actuarially sound, demographically robust, temporally adjusted, interactively designed, and probability oriented. The money flow will be transparent and accounted for professionally."
Yes we can.
Monday, February 16, 2009
$787 billion
A billion here...
Now the details of the stimulus package are out. Will it work? Has it been tested?Does anyone know?
Complicated economic/mathematical models have been run. But aren't they the ones which got us here?
Do they account for black swans? tipping points? cascades? power laws? multifractals? fat tails?cluster correlations? phase transitions? interactions? demographics? uncertainties? time frames?
The fact is that there are data mining, agent based, actuarially sound, data visualization, econometric tools available by which to truly test and monitor any stimulus scenario developed. The anticipated impact on the global and US economies as well as the individual sectors and businesses could be forecast. The options most likely to have the sustainable, transformative effect desired could be chosen and monitored and adjusted as needed.
How much more confidence would be inspired if officials could testify..."We anticipate (based on the best data and analysis availble) that this stimulus package will have an impact on GNP of $500 billlion in the first year with a 92% probability it will be at least $400 billion...the multipliers associated with the chosen components of the package are the largest of all those tested..."
Here are the details of the ($787 b) stimulus package passed this weekend:
$506 billion in spending
-$141b healthcare
-$92 b infrastructure
-$87b education
-$67b welfare
-$41b energy
-$10b housing
-$6b science
-$7b security
-$55b other
$281 billion tax credits
This money could be targeted and monitored at the micro level to have maximum impact. For example, the science money could to where it would have a multiplier of 22 or 1.
From the labs of Los Alamos to the campuses of Boston, the tools needed to assure that the stimulus works have already been developed. All we need to do is integrate them with those currently being used.
Yes we can
Lee
Now the details of the stimulus package are out. Will it work? Has it been tested?Does anyone know?
Complicated economic/mathematical models have been run. But aren't they the ones which got us here?
Do they account for black swans? tipping points? cascades? power laws? multifractals? fat tails?cluster correlations? phase transitions? interactions? demographics? uncertainties? time frames?
The fact is that there are data mining, agent based, actuarially sound, data visualization, econometric tools available by which to truly test and monitor any stimulus scenario developed. The anticipated impact on the global and US economies as well as the individual sectors and businesses could be forecast. The options most likely to have the sustainable, transformative effect desired could be chosen and monitored and adjusted as needed.
How much more confidence would be inspired if officials could testify..."We anticipate (based on the best data and analysis availble) that this stimulus package will have an impact on GNP of $500 billlion in the first year with a 92% probability it will be at least $400 billion...the multipliers associated with the chosen components of the package are the largest of all those tested..."
Here are the details of the ($787 b) stimulus package passed this weekend:
$506 billion in spending
-$141b healthcare
-$92 b infrastructure
-$87b education
-$67b welfare
-$41b energy
-$10b housing
-$6b science
-$7b security
-$55b other
$281 billion tax credits
This money could be targeted and monitored at the micro level to have maximum impact. For example, the science money could to where it would have a multiplier of 22 or 1.
From the labs of Los Alamos to the campuses of Boston, the tools needed to assure that the stimulus works have already been developed. All we need to do is integrate them with those currently being used.
Yes we can
Lee
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