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alpha0  ·  4653 days ago  ·  link  ·    ·  parent  ·  post: Machines of Loving Grace 1: Love and Power
mk, the fact of the matter remains that the models are statistical in nature and simply meaningless in context of a specific attributed loan process. The models are mathematical models of arbitrage and the domain entities are structured instruments (in this case) that bundle a variety of loans of various (roughly grouped) risk.

So, the notion of bank officer Joe giving a loan to Bob because of a "model" is entirely meaningless.

The models in questions were used to facilitate injection of super fluidity in the capital markets. The completely arbitrary aspect of the whole affair was given credibility due to the soundness of the underlying mathematics (which of course in no way supported the assumptions made in the model).

The accusation stands that this was a planned transfer of wealth mechanism when coupled with the edge nodes of the system: retail and commercial banking.

Due to the changes made to US regulatory policy as demanded by certain interests, these banks, which originally served the purpose of gate-keepers to the system, as entry points, by applying strict standards to valuation of properties and credit worthiness of loan applicants, adopted the policy of uncritical acceptance of rapidly inflating property valuations and applicants.

"quasi" governmental agencies, in turn, played the role of taking the activities of these brick and mortal end points, bundling them (as fixed income instruments), and Wall Street peddled it in the markets. The models were operable at the macro level of Wall Street.

What is happening now -- and what is to come yet .. -- was perfectly clear even to a layman such as myself. It is not rocket science. So for someone like me, the nagging question remains: are these people -- our leaders -- "nuts"? Is there a death wish for this country? Do they have our best interest in heart?

I say this, since as a technologist, I am not a luddite who does not appreciate the impact of technology and what is happening now (and then). I never drank the cool-aid of "new economy" to the extent that I would find it 'reasonable' to think that it is 'ok' to throw caution to the wind and dismantle a regulatory regime designed principally to prevent another "Great depression".

Having the ability to channel massive funds to specific sectors of the economy is a powerful thing. When GoldmanSachs and co. began inflating a tech bubble, they were fully aware -- they are not little children playing games -- that they were holding several of the key levers that affected the very direction of society. That is social engineering. That is real power.

For example, when GoldmanSachs, CitiBank, et al began funding Indian startups and setting up infrastructure in India, culminating in some cases the transfer of nearly "90%" of their IT workforce to a foreign nation, they very much changed certain key characteristics of this society. And, of course, India. India made a quick exit, in spirit if not body, from the "non-aligned" movement then and there ...

Again, I wish to remind you these people are very much your opposite numbers (you scientists) in the domains of power, money, and influence. Your way of thinking about their domain is very much like the guy in the street contemplating the dynamics of academia and philosophy of science. Kid yourself not.

I believe it is not only perfectly reasonable to be unreasonably suspicious of power elite at this crucial point in human history -- the machine and machine mediated society and the "state" and "corporations" that own and operate the said machines ... -- but it is in fact a moral duty.

I believe it is perfectly reasonable for a sub-set of us to look like "fools" and "nuts" as long as we collectively cover the various probabilities, given the critical importance of nipping in the bud any "low probability" but highly undesirable activities. I too wish to inhabit a social reality where I can comfortably chalk up BBC's loss of "entire archives on 9/11" to "incompetence" or "ooops".

You, cgod, could do your part in this collective effort by going easy on the (very trivial to assume position on a) high horse of hyper rationality based on "authoritative" evidence, and instead silently run the variables (as a thought experiment) in your head as you do what it is you do.

But please do not try and silence us. It is (remotely) possible that we are right.