If It Were So Big ...

A Little Lite Question

2010-01-13T15:22:00.000-08:00

Today is a B-day at the Congressional Financial Crisis Inquiry Commission (FCIC) Hearing. The main-stream media (MSM)has awakened, and the blogs are positively bubbly.

Serious questions are being asked by serious people: Andrew Ross Sorkin of Dealbook at the New York Times: http://www.nytimes.com/2010/01/12/business/12sorkin.html ; Eliot Spitzer, Frank Partnoy, and William Black at Huffington Post: http://www.huffingtonpost.com/eliot-spitzer/ask-the-bankers_b_420394.html#ask; Mike Konczal at New Deal 2.0: http://www.newdeal20.org/?p=7425&cpage=1#comment-3666 to name just a few.

What kind of answers are we going to get?

If you hadn’t already read the essay “The True Answer and the Right Answer” from Stanley Fish’s blog Opinionator http://opinionator.blogs.nytimes.com/2010/01/11/the-true-answer-and-the-right-answer/ , you need advanced graduate degrees in logic or familiarity with Tarskian gymnastics to tell which is “true” and which is “right.”

Under those circumstances, I thought a little lite question to enliven the hearing might be in order, like adding a little fizz to the gin and the tonic.

Distinguished Gentleman Bankers: Look to the colleague banker next to you, to your left or to your right, look carefully and estimate the sum-total cost of your colleague’s haircut, his tie, his shirt, his suit, his shoes, and his watch, and multiply that number by 40 in your heads, and tell me what it is.

I have a number in mind. If your number exceeds my number, you win the prize behind the door named “Bernie”; if your number does not exceed my number, you get the prize behind the door named “Pitch Fork.” Numbers and risk management experts that you all are, you shouldn’t need more than 10 seconds to get at your number.

Now, let’s go gentlemen, add your numbers up!

The Man Said "Just Call It"

2010-01-03T19:07:00.000-08:00

I know movies are made purely as entertainments, but once in a while we are lucky to find movies that do a double duty: as entertainments and as commentaries on what’s happening in our world.

For the Financial Crisis of 2008, Up In the Air has a great deal to say, but I nominate 1977 John Badham’s Saturday Night Fever and 2007 Coen brother’s No Country For Old Men as perfect metaphors for debt and gambling in America.

A scene in Saturday Night Fever opens with John Travolta as Tony Manero walking down a busy Brooklyn Street. The walk has the rhythm and the swagger down to his shoes. Life full with confidence. A picture of a young man on the go. He stops to order the pizza, his usual the double. Further on down the street he spots a shirt he likes. He goes into the shop, and said to the salesman: “Hey, you guys do layaway?” The salesman’s quick response: “As long as it didn’t turn into a 30-year mortgage.” Tony to salesman: “Here is five dollars for a blue shirt in the window, hold it.” The next scene opens with Tony asking an advance on his salary from his boss at the hardware store he work, as the latter was closing the shop for the day. The boss said to Tony: “You can save a little and build the future.” Tony to boss: “F… the future!”. Boss : “No Tony, you can’t f … the future; the future f…. you; it catches up with you, and f… you if you ain’t plan for it.”

The next movie is No Country For Old Men. A scene from it is a perfect coda to the scene from the Saturday Night Fever.

A man come into a lone gas station in a desert at dusk. The man look menacing, apparently looking for troubles. In the middle of a desultory conversation between the lone attendant and the man, the man take out a coin, ask the attendant “What is the most you ever lost in a coin toss?” and toss it. And while still covering the coin with his hand, he instruct the attendant to call it. The attendant demur by saying “We need to know what we are calling it for here,” But the man continue to press on calling it. He said “I can’t call it for you, or it wouldn’t be fair.” Finally, the man said “You know what date is on this coin?” “1958” he answer himself, and without pausing he said that the coin has been “travelling 22 years to get here; and now it’s here; and it’s here, head or tail.” “You need to call it.” “I didn’t put nothing up,” the attendant reply. The man still would not let go. The attendant finally give up by asking what he stand to win by calling it. “Everything” reply the man. The attendant made the right call, and his life was spared.

In our case back in the real world, the Fed Chairman Ben Bernanke has been telling us what the American economy is suffering from. He said it is a Great Repression, instead of a Great Depression which would have been unimaginably worst.

Thanks. Well done.

But still what I really like to know is when or where was the Great Repression hatched. Is DEBT the reason for the CRASH? I can’t believe that an ordinary kind of debt – the grease of modern economies – can cause such extensive damages. After all, we have been demanding from each other our pound of flesh ever since Adam and Eve walks the earth. Venice was not built in a day.

If debt really is the culprit, then it must be debts from the double and the triple deckers.

So what is the great lesson we all must learn? You can’t fool Mother Nature all the times or some of the times? Or that you cannot fool the people with the money because they can fool you first.

2009 Year-Ed Punditry

2010-01-03T19:03:00.000-08:00

Bookended by the twin calamities of 9/11 and the 2008 Financial Meltdown, this 2009 year-end punditry had an easier time of it. If you are a pundit, you can hardly go wrong by choosing one or the other as the reason for the American predicaments. No one will make a big fuss about it, because we have all shared the sufferings stemming from both.

However, for a nuanced explanation of a slow but sure decline of American preeminence in the world, what we need is a small-sieve -- but an extended -- examination of the causes of the failures.

In wars, Vietnam would be a good place to start, because many of us have lived through it and certainly can related to it viscerally and intellectually. It is the same for Iraq and Afghanistan. We can ask: Why Iraq? Why Afghanistan? Why one after the other?

In economic and finance, we have had any numbers of small but significant failures that can be considered as the precursors of the current Big One. That is if we had the intelligence to learn from such failures. Most of us lived through these failures, and there isn’t much excuse for not learning.

What did or should we have learned? We could have learned that

Savings and loan crisis of the late 80s and early 90s was an old-fashioned chicanery involving bankers and certain senators, whereas the failures of Long Term Capital in late 90s, Dot-com bubble in 2000, and Enron a year later in 2001 were a modern-day versions of an old-fashioned snake oils, cloaked within the claims of triumphalist technological sophistication of computers and computations. A new form of scientism gone wild.

The next question that we need to ask is “Is there a common thread to all these failures, large and small?”

The System Has Failed

2009-12-30T14:42:00.000-08:00

“A systemic failure has occurred, and I consider that totally unacceptable,” said President Obama.

On hearing the President, the first thought that came into my head was not “What? Not Again!” After Vietnam, Iraq, and the Financial Crisis of 2008, I am sorry to say that I am half-expecting that kinds of outcomes and statements.

But really why are we continuing to make the same kind of mistakes? That I don’t know, and I dearly wish to know.

The name of my blog itself was dedicated to highlighting that particular obsession of mine, viz. “Why aren’t we (or why can’t we) “connect the dots?””

That has also been the point of my question #12 from my previous post: Something to Think About.

However, I am glad to note that after the Financial Crisis of 2008, persons of statures and broadcast powers are also concerning themselves with these types of questions.

I have tried to honor the Queen Elizabeth of England and the Representative Sarbanes from the 3^rd district of Baltimore, Maryland by listing their respective statements as questions #1 and #2 in my essentially private posts.

But I hope that I have not spoiled Her Majesty’s incisive statement by paraphrasing it into a prose that only academically inclined can love.

As for Congressman Sarbanes, I was thrilled to hear him say that he will not accept answers that essentially said: “It’s not my job!” (RIP Freddie Prinze!) or “It’s not my specialty!” (See the post The Queen and Mr. Sarbanes.) The congressman was right to reject bureaucratic sparrings from infecting the hearings from the outset.

Bravo to both!

Something to Think About

2009-12-28T20:12:00.000-08:00

For as long as I can remember, I was fascinated by the ideas about thinking. As in any beginning, you start with the self, progresses to the thinking of others around you – friends, families, school mates and teachers – and finally to the wide world of ideas bubbling around you. You became familiar with the questions and the answers from the greats and not so greats, and as times go by, you even begin to think that you can join in that parade of ideas with your own banners of questions and answers.

As always, Paul Krugman of the New York Times has something direct and point-blank to say. His 2009 year end op-ed piece “The Big Zero” pretty well sums up the lost decade we had passed through. He ends his essay with these words: “So let’s bid a not at all fond farewell to the Big Zero — the decade in which we achieved nothing and learned nothing.”

I agree, but the agreement is predicated on a set of old, persistent, and difficult questions that have the same philosophical and scientific resonances as that of the contemporaneous ones raised by the likes of Paul Krugman.

I have no idea whether any of these questions are answerable under the aegis of science, philosophy, or politics, but they are certainly interesting and important enough to be addressed seriously.

Every listed question has an author. Questions without attributions

are mine, and I welcome any new questions from the readers. I owe the name of my blog “If It Were So Big …” to Her Majesty the Queen of England’s trenchant question about the financial crisis of 2008.

1. “If these things were so large, how come everyone missed them?” [Queen Elizabeth on Financial Crisis of 2008]

2. “We have been talking a lot about this metaphor, the blind man and the elephant. I don’t really buy that, because I think what – I certainly don’t buy it as an explanation for what happened. I think it’s been used as a kind of excuse to pass the buck and sort of say, well, nobody could see the whole picture, so we were each compromised in our ability to take action that would have mattered and made a difference, but the hearing testimony today just confirms to me that in each part of the world that you each had a clear perspective on, you had tools that you could have used, which if you had used them, might have averted the situation, or certainly lessened its impact.” [Representative Sarbanes on Financial Crisis of 2008]

3. How the mind works fundamentally in two entirely different and distinct ways – consciously with efforts, unconsciously without efforts: “a capacity for description or calculation or inference” when it works consciously, and “a species of direct acquaintance” when it works unconsciously, to use the nomenclatures employed by Isaiah Berlin in his influential essay “Political Judgment.” The question: Why not just one way or the other?

4. “[T]here is a real problem about how much such a thing as reason is possible. How is it possible that creatures like ourselves, supplied with the contingent capacities of a biological species whose very existence appears to be radically accidental, should have access to a universally valid method of objective thoughts.” [Thomas Nagel]

5. “Is the Universe Designed?” [Steven Weinberg]

6. Why is the velocity of light the same when measured against a stationary or a moving frame? Einstein presented the constant velocity of light as a postulate: it was not explained.

7. “What is the relation between thinking and the world?” [Albert Einstein]

8. “One may say ‘the eternal mystery of the world is its comprehensibility.’ It is one of the great realization of Immanuel Kant that the postulation of a real external world would be senseless without the comprehensibility.” [Albert Einstein]

9. Is there a foundation of knowledge? [Descartes, Hume, Kant]

10. There is no foundation of knowledge. [Richard Rorty]

11. Why – in some fundamental sense – does it mean for someone “to understand a particular situation in its full uniqueness?” [The phrase in quotes are from Isaiah Berlin’s essay “Political Judgment.”]

12. Why – in some fundamental sense – a sophisticated and scientific modes of reasoning, buttressed with the unlimited resources of modern networks of large institutions, is fallible, woefully at times, and also why on the whole, the results of these scientific decision-makings are not always measurably better – and in some situations even inferior – to the decisions made with traditional, prosaic, and imprecise forms of knowledge such as judgment, recognition, intuition, and experience?

13. Why are human beings a very profligate and proficient users of “images, metaphors, and analogies”?

14. How does scientific change occurs: gradually or in sudden quick jumps? [Thomas Kuhn]

15. Why is that “massive historical trends have been largely unanticipated? [Robert Heilbroner]

16. “What design nature may have had in creating consciousness? What functions was it to serve? To what biological imperative did evolution respond in creating this extraordinary way of highlighting the immediate? For what niche in the world did it fit man?” [Jerome Bruner]

17. Why is it that the “basic logic of a machine designed for numerical solution of differential equations coincide with the logic of a machine intended to make bills for department stores”? [Howard Aiken]

18. “Can computers be as intelligent as people? How can we make sense of the reality behind quantum mechanics? And what is the physical basis of consciousness?” [David Chalmers’s “Three Unsolved Problems in Late Twentieth-Century Science.”]

19. “How come it that human beings, whose contact with the world are brief and personal and limited, are nevertheless able to know as much as they do know?” [Bertrand Russell]

20. Why are we – humans as well as animals, including babies – able to recognize a face or a pattern, so easily, and so effortlessly?

21. What would it take for a single ruler for it to measure all manners and sizes of rooms?

22. “Why can we remember the past, yet not the future?” [Stephen Hawking]

23. “Even if there is only one possible unified theory, it is just a set of rules and equations. What is it that breathes fire into the equations and makes a universe for them to describe?... Why does the universe go to all the bother of existing? Is the unified theory so compelling that it brings about its own existence? Or does it need a creator, and, if so does he have any other effect on the universe? And who created him?” [Stephen Hawking]

24. What is the origin of wave-particle duality? Note it is a different sort of question from that of a wave turning into a particle under quantum measurement, known also as the “the collapse of the wavefunction.”

25. Coming right down to the brass tacks, there are only two things in the world, but why?

26. “A central problem of interpreting the world is determining how, in fact, human beings proceed to do so. It is the study of interaction between a particular, biologically given complex system – the human mind – and the physical and the social world.” [Noam Chomsky]

27. “It always seems odd to me that the fundamental laws of physics, when discovered, can appear in so many different forms that are not apparently identical at first, but with a little mathematical fiddling you can show the relationship. An example of this is the Schrodinger equation and the Heisenberg formulation of quantum mechanics. I don’t know why this is – it remains a mystery, but it was something I learned from experience. There is always another way to say the same thing that doesn’t look at all like the way you said it before. I don’t know what the reason for this is. I think it is somehow a representation of the simplicity of nature.” [Richard Feynman]

28. “One of the remarkable things about the behavior of the world is how it seems to be grounded in mathematics to a quite extraordinary degree of accuracy. The more we understand about the physical world, and the deeper we probe into the laws of nature, the more it seems as though the physical world almost evaporates and we are left with mathematics. The deeper we understand the laws of physics, the more we are driven into this world of mathematics and of mathematical concepts.” [Roger Penrose]

29. “My philosophical project, over the last twenty years or so, has been to understand the relation between a venerable old idea borrowed from what philosophers call ‘folks psychology’, and a trendy new idea borrowed mainly from Alan Turing. The old idea is that mental states are characteristically intentional; or at least that those mental states involved in cognition characteristically are. The new idea is that mental processes are characteristically computational. My problem lies in the apparently difficulty of getting ideas to fit together.” [Jerry Fodor]

30. To be continued.

I hope that the readers will recognize among the questions many that are familiar, one or two that is interesting, and perhaps one so compelling that an answer had to be sought.

Happy New Year!

The Prime Minister & Mr. Maggot

2009-12-28T09:54:00.000-08:00

In his autobiography “Saturday Son”, the former Prime Minister of Burma U Nu – who is now deceased -- described the early morning scene at his house on the day of the military coup in 1962.

Unbeknownst to him, a coup had been announced on the radio, and a contingent of soldiers had came to his house to arrest him. He heard a soldier talked into his walkie-talkie, “We’ve got the maggot.” The words did not register with the prime minister immediately, “but when the soldier keep repeating “We’ve caught the maggot” , “it dawned upon him that the man was reporting his capture to headquarters, and the word “maggot” was the code name assigned to him. It seemed a big drop from prime minister to maggot. He smiled.”

A cabal of military men had ruled Burma uninterrupted since, and given the utter ruins that had been visited upon that country from that fateful days on, I often wonder why nobody – the best and the brightest in government and those in the political establishments outside it – foresaw what was coming and do something about it.

Sad to state, I never saw these kinds of questions get to a satisfying answer. Always a new rounds of events comes around to muddy the old ones.

In that sense, we are like the proverbial Swiss watchmaker who never get to assemble a single piece of a finished watch as he was frequently called to answer the doorbell of his workplace!

Financial Meltdown Forensic

2009-12-27T20:11:00.000-08:00

My hard drive is already choking with a whole year worth of commentaries, explanations, and stories of the Financial Meltdown of 2008, but I must admit that I felt a slight gag when I read the latest addition to it.

I had always thought “Saving is Good”, but this new reading material begins with a headline that said “Big Savers Got Us into This Mess, as well as Big Spenders.”

You could be a cave dweller if you don’t know that Big Savers are China and Germany, and we in the U.S. of A and Britain – and with Spain and a few small countries from across the Channel -- are the Big Spenders.

The headline jives with a cartoon from the New Yorker magazine of a Chinese worker making sandals, herself bare-footed.

I got it.

I can now imagine a mountain of Cash sloshing around the world banks’ vaults doing nothing other than sloshing. I don’t mind the sloshing. But the Bankers of the World had a brilliant idea. Why not transform IT and spread it around, while of course helping themselves on a huge Chunk of it in the forms of multi-million-dollars apartments in sky-high buildings with amenities that regular folks have never heard of. People might have heard of the extravagant appointments of banker Thain’s New York office -- $35000 commode and $87000 rug, but I doubt that many people knew that there are apartments in New York with bathroom floor heated from below so that one can walk bare-foot in the depth of winter and not feel the stab of a cold stone on ones sole.

Bankers have been fond of saying that they are the ones who make “Your Money Works For You,” i.e. to turn your Savings into Investments. For years, it was their ambits. We knew it as CDs with differing maturity dates and varying sizes of income streams.

But within a decade from the late 90s, a new world of finance had begun to emerge, unbeknownst to the folks with the CDs.

The story was that a repeal of certain laws of financial regulations and the advent of computers and computation help to bring this free-range banking into being. The ambits for the bankers were widened. Bankers can now roam free, and they begin to assume the title of “Financial Engineers,” thus borrowing lock, stock and barrel the accrued reputation of safety, prudence, and design from the engineers who have built roads, bridges and buildings for centuries of public use. Roman aqueducts are still standing.

Instead of the materials of steel and concrete of engineers, the “materials” of the bankers are the “financial structures” of cleverly invented asset classes, which are “innovated” further into assets of assets of assets, which are in turn mixed and mashed and rated and insured and sold to various classes of investors for certain income streams. The investor may be the endowment fund of your alma mater, the police and fireman retirement funds of the county you reside in, or your rich uncle who has investments in a hedge fund.

Securitization is an old word but it now describes this new face of modern financial engineering, but the Nobel laureate economist Joseph Stiglitz has a different name for it, calling it “The Goldberg Machine,” which means a clever rigging of improbable and incongruous elements into a structure that in the end just do one simple thing: for example, produce an income streams for investors. I call it “Promises, Promises,” because honestly nobody can calculate the probabilities of complex-structured elements of differing origins working reliably as designed, whatever the provenance. Gods will not sign on the dotted lines!

In short, modern finance is collapsing under its own weight of artificial complexity and outright chicanery, taking the rest of us down in the process.

On this topic, Robin Wells of the Guardian online article “Big Savers Got Us into This Mess, as well as Big Spenders.” http://www.guardian.co.uk/commentisfree/2009/dec/03/financial-crisis-global-savings-glut has a different take as to the origin of the Financial Meltdown. She writes:

[Quote] Yes, we can blame the City and Wall Street for turning the global savings glut into fissile material. But that's like saying, "hyenas do what hyenas do". Given extraordinarily lax regulation and a flood of money to play with, bankers were just acting according to their incentive schemes. They merely took advantage of the opportunities the glut presented. The real culprits are thrifty Germans, and state-owned enterprises in China – along with governments of other countries, of course, turning a blind eye to the escalating problems. [Unquote]

I am Not a Luddite

2009-12-27T19:38:00.000-08:00

Precision can be a mean as well as an end of determinism, and determinism is the modus operandi of science. The great Albert Einstein was a champion of determinism (and his beloved classical physics) when he proclaimed “God does not play dice!”

So I am nervous about declaring determinism a major menace to good decision-making, but the truth – in the form of caution -- must be told.

Like everybody else, I am all for the precision, the truth and the determinism, and all the usual good stuffs that go with it, but not when they were applied prematurely.

Haven’t we have acted as if the earth is flat, although it is not when we examined it precisely later on? When we say that the earth is flat, we are roughly correct, not wrong, for otherwise we wouldn’t be able to walk on it. Two parallel lines meet in the distance, and when we walk towards the point of convergence, we found out that truly parallel lines never do meet. There’s another convergence point ahead of us. We live and learn. And the mean we do it with is the method of successive approximation.

The principle of RC to PC that I have been referring to is phrased a bit awkwardly, but the meaning in some deep sense is the same as “successive approximation.”

I am only saying that in the real world the probabilities are not with you if the determinism is your only companion.

Determinism works only if you are the sole scriptwriter of the whole play.

Let your imagination play!

Men With Steel-Trap Minds

2009-12-27T19:06:00.000-08:00

When I was at home in my native land, Time and Newsweek were hard to find. The authorities considered both magazines the propaganda arms of a big bad powerful imperialist. To find a stray copy or two, you needed to scrounge around holes-in-the-wall bookstores and pay a king’s ransom to get your hand on the newest issue.

If Richard Pryor had been in one of those old issues that I have gotten hold of, I would not have given a second glance. At that time, my eyes were peeled for two news items only: immigration reform in U.S. Congress and the latest trends in sciences and technologies. Immigration reformed will cut the wait in years for an entry visas; knowledge of trends in sciences and technologies will allow me to plan or forge a career path.

I thought I might have a chance to work in an area or a field that was been talked about in those popular weekly magazines. As I remembered it the magazines had glowing account of men managing the Vietnam War, and their arsenals of scientific tools. The magazines mentioned the management methods of Robert McNamara when he was a CEO of Ford Motor Company. Articles mentioned his “steel-trap mind,” helped along it appeared by the then popular acolytes of scientific management, such as critical paths, linear programming, game theory, artificial intelligence, machine learning, etc. etc.

As I made a survey of the topics however, I found myself at odds over the classical maximum-minimum principle governing the thinking over many of these fields of studies. Nor could I believe that Nature is as overly deterministic and bloody minded as the least action principle of classical physics seems to demand. The idea of the biggest bang for the buck did seems a big much.

Faced with such doubts about determinism, I did what anyone with an ounce of free will would do: force oneself to a belief that freedom (or flexibility) must also be an essential element of Nature.

We know that these two polar elements are orthogonal to each other. And therefore how does one goes about incorporating the two diametrical opposites -- freedom and determinism -- into the same bosom of Nature?

One way of incorporation is to demand Nature to go in stages -- from big bang to big bang – from the states of being free or flexible to the states that are deterministic or single-valued. Like walking, a step at a time, shifting weights from left to right (L-R) and right to left (R-L).

From such beginnings, one didn’t have to go far to see that the formulation with freedom and determinism is analogous to the concepts: of order and disorder from thermodynamics; of mind and body from philosophy; of wave and particle from quantum physics; of variation and selection from evolutionary biology; of linear and nonlinear from mathematics and so on and on at infinitum.

If you carry on with this kinds of analogies, you will end up noting that nothing in Nature exists without their own special pairs of opposites.

The principle “RC to PC” (“roughly correct to precisely correct”) is one among the multitudes. An awkward formulation perhaps, but the formula is extremely useful to me from the point of view of the problems that I set out to understand.

At the least, it gives me a good set of nose for a healthy skepticism. Certainly a tad more “scientific” measure of what works than what you would get from knowing that something is “too good to be true”. Instead of saying something is too good to be true, I might have said that something is “too precise” to be workable or believable. “Premature precision” is the word I sometimes use.

It’s a useful metric.

However, the application of the rule has not been as straight forward in some cases, but it does not disappoint.

A reader can certainly judge for his/her-self whether the principle of RC to PC could have been helpful in the following problem-situations.

1. A President’s Daily Brief

“Bin Laden determined to attack inside the United States” was the headline item in the President’ Daily Brief (PDB) of August 6^th. PDB predates the actual attack on 9/11.

Congressmen wanted to know what was the state of intelligence and what if anything was been done about it. National Security Adviser Condoleezza Rice was the point woman of Bush administration. She started by giving a disquisition on the nature of information – the actionable information and the historical information [my italics]. She implied that August 6^th PDB was a historical information, i.e. Bin Laden was a sworn enemy of the United States. Nothing new there.

She also said no one had briefed WH about “planes as missiles,” adding “No one could have imagined them taking a plane, slamming it into the Pentagon,” and the World Trade Centers.

Of course. God himself would not have drawn such a detailed picture of the catastrophe that followed, for even a God – if He/She is a part of Nature -- must follow the principle of RC to PC.

Data are dead and desiccated without the foliage from a hypothesis.

A corollary to the principle of RC to PC is, absence the background (the “hypothesis”) the figure (the “data”) belongs everywhere and nowhere.

To be concrete, before 9/11, who has given a penny worth of thought about young Muslim men attending aviation schools?

2. Dominoes & Determinism

The Iraq War was fought for Peace – peace in the Middle East and beyond. The grand scheme we were told was a democratic Iraq, acting as the catalyst of change for the rest of the Arab world. From the Euphrates to the Niles. A fine piece of diplomatic vision worthy of a presidential ambition of a great powerful country.

Let’s go back to another time and another place – the place called Vietnam. The War rationale then was if Vietnam had fallen, other Asian countries likewise would have fallen to communism. Asian countries as dominoes, falling one after another. Determinism grimly at work.

The history has not blessed either visions, the one based on hopes or the other based on fear.

3. WMD-sized Derivatives

The Financial Meltdown of 2008 arrived in the United States and spread to the world. Another Great Depression was eminent. Congress called in the FED Chairman Alan Greenspan to explain the why and wherefore of the great calamity.

The congressional records have provided the full details – the questions, the answers and the explanations. However, the overwhelming substance and tone of the Chairman Greenspan’s answers were about a faulty worldview, about academic theory that spawned WMD-sized financial derivatives, about stats and maths models that reside on the hard disks of the FED and Wall Street supercomputers.

Of the latter, he said: “A Nobel Prize was awarded for the discovery of the pricing model that underpins much of the advance in derivates markets. This modern risk management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year because the data inputted into the risk management models generally covered only the past two decades, a period of euphoria.”

The businesses of the world were run on autopilot, and everybody was watching the numbers on their respective meters, totally unaware of the impending darkness that was descending over them.

Asked to comment on the failure of the Federal Reserve to properly warn of the Financial Meltdown of 2008 Mr. Greenspan gave what I thought was a oracular answer. Risk models, according to the Chairman, were under pricing risk by assuming ever rising housing prices.

The Chairman appeared to be pointing the finger at the fragility of math models that the rocket scientists of Wall Street have built for themselves.

A New World & Greeting From Richard Pryor

2009-12-26T12:08:00.000-08:00

The next phase of life journey begun on an island in front of One Times Square Building on 42^nd Street in New York. Two suit cases and a wife in tow. New immigrants. Exhilarated and fearful at the same time. We situated ourselves close to the Army Recruiting Booth, a place of safety in our estimation. Cannot remember if there were real persons inside, or just an empty booth with picture of Uncle Sam’s I Want You on the outside. No matter, a picture is always worth a thousand words.

Next, we crossed the street, planted ourselves in front of a large record store, waiting for a taxi to take us to a hotel. Browsing the display window, we saw a picture spread of a half naked man on an album cover. Dressed in a loin cloth and squatting as I vaguely remembered. An indelible memory marker of our arrival at the New World.

When we became hip to the ways of a Big City, we found out that the half naked man was no aborigine, but a white-hot comedian named Richard Pryor.

What to Do When a Dictator Came Calling

2009-12-26T12:03:00.000-08:00

2009 Nobel Prize winners had been announced and awarded. I can name three without pausing to think: Paul Krugman, President Obama, and Herta Müller. A home town boy made good; my President, but who is Herta Müller?

She is the winner of Nobel Prize for Literature, and I found her win the most exhilarating. She is a German of Romanian origin, and her novels are about lives under a dictatorship of Ceauşescu: How people – the oppressed and the oppressors both– carries on. Scratching and hurting each other in innumerable ways. Very much like the characters in Florian Henckel von Donnersmach’s film “The Lives of Others.” I could have traded with Herta Müller a few of those stories, for I am sure that there is a deep well of common humanity underneath the veneers of cultural differences between countries.

A heroine in one of Müller’s novels is a seamstress who sewn her name and a message “Marry Me” into every trousers her factory exported to the West. I am sure a young Burmese girl in a similar situation of boredom and pettiness of lives under a similar regime could have come up with a similar solution. Only that no one has chosen to record it as yet.

But I have a real story to tell Herta Müller. Without the sensibilities of her talents and breadth of her experiences, I can show only the skin of the story.

The faculty at Rangoon Institute of Technology received a questionnaire asking us whether we are members of the BSPP (Burma Socialist Program Party), and if not where the application to join it can be obtained. The junior and senior faculty piled into too few private cars – a Hillman or two, a few Vauxhalls and a couple of Toyotas – and drove to downtown Municipal Building near Sule Pagoda. I ended up riding in a car where the Dean was a passenger. A provocateur in me said something provocative, and the Dean replied with a pithy Burmese proverb that silenced the provocateur in me. Were I able to channel Sara Palin, I could have said to the Dean “Only dead fish go with the flow.”

Now every time I saw a teen movie like “Grease” where everybody piles into available cars, all engines rev up and firing – ready to drive to a racing site or their own favored place to hang out – my memory invariably flashes back to that particular day at R.I.T! That day – more than anything else – was a “decider” [to borrow a word from former President Bush’s favorite locution “I’m the decider.”] for my decision to leave the country ASAP.

Home Town Games

2009-12-26T10:18:00.000-08:00

We were a group of boys aged 10 to 13 who congregated to play street games that involve hitting one object with another, usually from a distance. The projectiles are generally pieces of metal or other objects that slides or throws well. The arrangements of seeds from the local flora usually form the target. The seeds were our chips, our currency. Imagine if you will a primitive and free form of bowling without the pin setting machine or a set pattern of individual lanes. That was the game we played.

The nature of the game varies with the arrangement of the target negotiated before hand. It could be a vertical arrangement, one behind the other or a horizontal one, spread across, or some other designs. The object is always to knock out as many of the pieces as possible in one throw. Strategy and finesse, more than accuracy, are required to be a consistent winner.

We played in the street when the bullock cart traffic was no longer active. When it rained, we played a truncated versions of the same games under our houses which were built on long legs, with enough headroom for an adult to walk through with ease. The space sometimes doubled as refuge for some domesticated animals, when the weather was bad.

We preferred the street, played until dusk or the players’ quorum falls below some number, or when continued playing was no longer fun. We broke up when some of us were called to dinners by our parents.

It was an idyllic times in our lives, i.e. until the two brothers joined our closed circle of friends. They were children of farm hands, with darker shade of skins, their little bodies wound tight with muscles which we didn’t possess. They told us that they knew kick-boxing, and we believe them without any demonstrations on their parts.

They came to play our games, and before long the brothers were bullying us in all sorts of ways. Even the bravest and the brawniest among us refused to confront them, i.e. until the brothers and we agreed to a game which allow the winner to strike the loser’s hand planted as a target some distance away. In this game, the hand must planted and the fist hold tight as the winner tried to strike the loser’s hand with a projectile made usually of round glass beads. A child’s version of Russian roulette you could say.

I was considered a good shot among our circle of gamers, and so I was chosen to play against the older brother. I won and I won. The older brother’s hand was black and blue, and as the game progressed, his hand flinched, an instinctual movement away from the incoming projectile. His spirit also capitulated, and from that day on, we became friends.

Best, the normalcy returned. We grew up.

The story of the two brothers should end here, but it was only the beginning. A major life lesson was learnt.

I will now put my life reel on fast forward.

Five Stages of Life

2009-12-25T21:16:00.000-08:00

When I was a boy, WWII came and gone as if it was a natural phenomenon. Like the rainstorms and thunderclaps of a monsoon, here today, gone tomorrow. No question of “why” WWII came to my native land ever arises in my mind.

1962 military coup in Burma was altogether different. It had cracked the shell in which I was living.

Vietnam War taught me a few things beyond the lessons of citizenship and politics. But I don’t feel that my understanding was adequate, mainly because my knowledge of the steps that led to it was second hand. I felt like the eyewitness who came after the fight had started: all you see are the bruised lips and broken noses.

In Iraq War my senses were better tuned. Before the sky of Baghdad had lit up with the bombs and the flares, I have the sensation that the fuse of war will be lit at any minute. There were thunderous speeches and drum beats for war, including what turned out to be some falsehoods dressed up in a dulcet tones of diplomacy. The demonstration at the UN lacked only the Bunsen burner.

No one vigorously opposed – or dared to oppose – the prevailing sentiments. Senator Hillary Clinton’s (now the Secretary of State in Obama administration ) YES vote in Congress for war authorization bill can be understood in such light.

Now we are in a pickle – in Iraq and on Wall Street.

We are in Iraq for the seventh year, and no one (except a few) fess up to been wrong.

As to what happened on Wall Street, the corpse is still warm, and there is no time yet for detailed autopsies to find either the causes or the culprits. But then why do I feel like the gas station attendant in the move “No Country For Old Men” who put nothing up in the coin toss, and yet his fate is being decided by the outcome of that toss?

The Spider-Man on the Bus

2009-08-05T19:51:00.000-07:00

I was traveling on a bus going uptown on 3^rd Avenue in New York City. A young child and her grand mother sat in a double-seat immediately next to the rear exit door. I was a seat behind them.

A man was seen exiting, and as quickly he stepped back in and then he exited again. He was stepping up and stepping down the bus back exit with no apparent reason, and I was beginning to think that he was weird. Finally, the bus started to move, and the man was left standing on the sidewalk. When the exit door finally closed, the child cried out “Spider-Man!” while laughing heartily. It took me a better part of the journey to figure out the meaning of a happy little girl’s apt analogy.

It was huge leap of imagination for any one—let alone from a little girl—to see a parallel between a city bus and tall skyscraper buildings of Spider-Man movies! In her mind, the behavior of the man was something like the Spider-Man hopping on and hopping off tall skyscraper buildings.

This ability to see something as another thing can’t be the same stuff that went into computers to make them smart. Even computers that manage hedge funds, that plays master level chess, that manage orbital flights, that manage electricity grids of large cities, that suggest diagnosis of a complex disease must be considered dullards when we compare them with the brain of a human child.

Surely, the expertise in a narrow domain cannot hold a candle to the adaptability and creativity of human beings.

The System was Blinking Red

2009-07-10T20:18:00.000-07:00

A few weeks before 9/11 attacks on United States, President Bush received from the Director of CIA an intelligence memo, known as The President’s Daily Brief (PDB for short). The August 6^th PDB summarizes the most important elements of intelligence available to the nation on that particular day. The intelligence headline for the day was : “Bin Laden determined to attack inside U.S.”

We all know what happened a few weeks later.

So the natural question was what was the follow-up by the White House with respect to that warning. At the Congressional Hearings, investigating the failures of US Intelligence, the then National Security Adviser Condoleeza Rice claimed that the aforementioned PDB does not contained an “actionable intelligence,” meaning that it contained no new threat information. In fact, she used the phrase “historical information” in her characterization of the that particular PDB.

Subsequent exchanges between the Senators on the Committee and Condoleeza Rice was partly a political theater and partly a semantical exercise. Fred Kaplan of online Slate magazine described the exchanges as follows:

“Rice insisted this title meant nothing. The document consisted of merely “historical information” about al-Qaida—various plans and attacks of the past. “This was not a ‘threat report,’ “ she said. It “did not warn of any coming attack inside the United States.” Later in the hearing, she restated the point: “The PDB does not say the United States is going to be attacked. It says Bin Laden would like to attack the United States.” [ Italics in the original http://www.slate.com/id/2098499 ]

Furthermore, Rice’s recollection was that no one had briefed the WH about “planes as missiles”, although she cannot be sure whether there is a scenario of the sort secreted in the bowels of the bureaucracy. She said “”No one could have imagined them taking a plane, slamming it into the Pentagon” – I’m paraphrasing now – “into the World Trade Center, using planes as a missile.” To the best of my knowledge, Mr. Chairman, this kind of analysis about the use of airplanes as weapons actually was never briefed to us.

The Queen and Mr. Sarbanes

2009-07-09T21:52:00.000-07:00

From every corners of the globe the headlines are screaming “Financial Meltdown” that it might be hard even for a hermit to escape hearing about it. The Meltdown elicits shocked disbelief from everyone, including the Queen of England. At a function, the queen met professor Luis Garicano of the London School of Economics (LSE), and asked him “If these things were so large, how come everyone missed them?” The professor’s answer was: “At every stage, someone was relying on somebody else and everyone thought they were doing the right thing.”

To which, Her Majesty the Queen said a single word, “Awful!”

Her Majesty’s question is of the type that we are familiar as an “elephant in the room”: If there was an elephant in the room, why did nobody notice the elephant? No logical answer would suffice to explain the conundrum inherent in such a question.

No heads were put on the block.

However at the Committee Hearings of the U.S. House of Representatives on the subject of the Financial Crisis and the Role of Federal Regulators, the heads of former FED Chairman Alan Greenspan, former Treasury Secretary John Snow, and former SEC Chairman Christopher Cox were put -- so to speak – on the block. Take, for instance, the statement made by Representative Sarbanes:

“We have been talking a lot about this metaphor, the blind man and the elephant. I don’t really buy that, because I think what – I certainly don’t buy it as an explanation for what happened. I think it’s been used as a kind of excuse to pass the buck and sort of say, well, nobody could see the whole picture, so we were each compromised in our ability to take action that would have mattered and made a difference, but the hearing testimony today just confirms to me that in each part of the world that you each had a clear perspective on, you had tools that you could have used, which if you had used them, might have averted the situation, or certainly lessened its impact.”

I have selected a subset of the answers and explanations from the former FED Chairman Alan Greenspan’s.

1. In 2005, I raised concerns that the protracted period of underpricing of risk, if history was any guide, would have dire consequences. This crisis, however, has turned out to be much broader than anything I could have imagined.

2. What went wrong with global economic policies that had worked so effectively for nearly four decades?

3. To the most sophisticated investors in the world, they [the derivatives?] were wrongly viewed as a “steal.”

4. A Nobel Prize was awarded for the discovery of the pricing model that underpins much of the advance in derivates markets. This modern risk management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year because the data inputted into the risk management models generally covered only the past two decades, a period of euphoria.

5. Had instead the models been fitted more appropriately to historic periods of stress, capital requirements would have been much higher and the financial world would be in far better shape today, in my judgment.

For the contexts of these statements, the readers can go to the original sources of unedited transcripts of the hearings: http://oversight.house.gov/story.asp?ID=2256.