Quoted from here:
http://changingminds.org/explanations/theories/side_bet.htm
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We make choices based on assumptions about the world around us and previous decisions we have made. In this we make 'side bets' that are based on a main bet or activity succeeding. If we fail at the main bet then we also lose the side bet. The side bets thus increase commitment to the main bet.
As Becker said:
"Commitments come into being when a person, by making a side-bet, links extraneous interests with a consistent line of activity."
In the same vein a reverse effect occurs in hedging activity. If we make a side bet on which we win if the main bet fails, then our commitment to the main bet fails.
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Hedge Fund side bets so far exceed the underlaying value of what they are betting on that the commitment to the main bet fails.
If the side bets win there is not enough money (in the world) to pay the side betters. More money has to be created to pay them. Another way to solve the problem is to declare all side bets null and void or proportionally relate the value of the side bets to the underlaying value.
If the holders of the side bets also have some power over the creation of money then what is the obvious thing for the betters to do?
What will creation of enough money to pay off the side bets in full do to the economy?
This seems like a good idea quoted from here:
http://www.star-telegram.com/104/story/1175840.html
.............................................
So: Immediately declare null and void all derivative contracts worldwide where the investor doesn’t have a vested interest in the property that the derivative was purchased for. After all, you can’t buy life insurance on someone you are not financially bound to, so why should someone be able to buy a derivative (insurance) on a mortgage or bond package they don’t own? That’s nothing more than a side bet on someone else’s action, and it leads some individuals to bet on disaster because it makes them rich while everyone else suffers. But our government is covering those side bets now – and it needs to end.
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Then let mortgage failure run its course with some degree of government mortgage assistance to keep those with marginal ability to pay afloat and lessen the impact. Mortgage assistance therefore has to be extended by category to those that it would help the most to survive. Then let those that can't sink. A tough way to solve this problem. Fair only in the macro analysis.
Monday, February 9, 2009
Sunday, February 8, 2009
Government Spying Upon Itself
Government spying upon itself as an intelligence gathering function is elegant.
It is so obvious. The National Security Agency is its own best place to record and analyze everything that its own people are communicating. It is the greatest social media test tube ever created. It is exploring social media like NASA is exploring space. It has unbridled funds to do it. The spin off benefits to society of our investment in this area will someday be recognized. Unfortunate that it has to be kept secret today.
NSA has an internal structure to deal with all the information it is pulling in from external sources. An internal communication system, an analysis system. Ultimately its best resource is its people. Its human analyst that compile everything and extract meaning like a very high level structured program.
The beauty of the internal NSA spy system is that NSA can structure it without any limitation to its specific purpose. It can record everything that its own people are saying an mine it. Mine it using social media methods, without restrictions to get in the way. Privacy within NSA is a non issue. The perfect environment to develop social media.
How might it look?
The answer is that it would look like the perfect social media system. At least the best one that money can buy today. It accomplishes all the objectives of a social media system. Those objectives are largely in the realm of genius dreams outside of the secret world of NSA and I am sure that we would marvel at what is being done. Actually, what has to be done to protect our nations security using the best means to protect it: Information, knowledge.
If social media serves up collective intelligence in the most elegant manner and the NSA has to have the best intelligence system then I hope this secret system is applied publicly and soon. Certainly it is as NSA research on information and knowledge systems is escaping control as it leaks out in academic areas. Like controlling the secrets of the atom bomb, the secrets of information and knowledge system creation and application can't be contained. NSA is probably drawing more conceptually in improving thier internal social media structure than they are contributing. What NSA has to contribute is an actual implementation of all the concepts.
Where better to apply proven system of social media application to extract collective intelligence than the public operation of government and governance?
In addition to the intelligence being provided by the NSA and the NSC to President OBAMA that is the product of our best intelligence gathering system, the emerging beauty of the internal system analysis using advanced social media concepts and applications for national security becomes an independent matter of best advice to the president consistent with and contributing to his objective of involving all of us in the government process.
Our space program had substantial spin off benefit to our society at the pinnacle of industrial development and perhaps marked the transition to its greater contribution to the emergence of information age development. Our information age development leadership organization is now the NSA. We don't see the spectacular results of that development in social media application form equal to a blast off preceded by a count down to draw the attention of a nation. It would reveal sources and methods and capabilities of internal systems that are secret.
Keeping implementations of social media concepts applied internally, with probable external extensions to support it, a national secret will not be in the national interest. When President Obama's security advisors reveal the national benefit of the system, independent of what it produces then they will really be contributing to the defense of the nation.
The only problem is that product of a collective intelligence system is by definition an indication of the most intelligent thing to do. It is also supported by structure of logic and reason and analysis that can be examined in detailed range and depth. Such a product may indicate changes to established systems that are not as well supported, or in fact do not have any rational support.
Who would have ever thought that the greatest battle between unsubstantiated faith and its greatest opponent; reason would find its emergence for the NSA? Not surprising if the basis is intelligence and discovery that the best intelligence is found in our collective thought, not the insertion of thought fallacies in individual minds that are in positions of power to force their influence.
Government doing its best to spy upon itself and reveal the intelligent thing to do might be the solution to the problem when the methodology emerges for public benefit. How will it emerge? By those doing things for us in our best interest without our full knowledge of what is driving their efforts? That is not collective intelligence.
It is so obvious. The National Security Agency is its own best place to record and analyze everything that its own people are communicating. It is the greatest social media test tube ever created. It is exploring social media like NASA is exploring space. It has unbridled funds to do it. The spin off benefits to society of our investment in this area will someday be recognized. Unfortunate that it has to be kept secret today.
NSA has an internal structure to deal with all the information it is pulling in from external sources. An internal communication system, an analysis system. Ultimately its best resource is its people. Its human analyst that compile everything and extract meaning like a very high level structured program.
The beauty of the internal NSA spy system is that NSA can structure it without any limitation to its specific purpose. It can record everything that its own people are saying an mine it. Mine it using social media methods, without restrictions to get in the way. Privacy within NSA is a non issue. The perfect environment to develop social media.
How might it look?
The answer is that it would look like the perfect social media system. At least the best one that money can buy today. It accomplishes all the objectives of a social media system. Those objectives are largely in the realm of genius dreams outside of the secret world of NSA and I am sure that we would marvel at what is being done. Actually, what has to be done to protect our nations security using the best means to protect it: Information, knowledge.
If social media serves up collective intelligence in the most elegant manner and the NSA has to have the best intelligence system then I hope this secret system is applied publicly and soon. Certainly it is as NSA research on information and knowledge systems is escaping control as it leaks out in academic areas. Like controlling the secrets of the atom bomb, the secrets of information and knowledge system creation and application can't be contained. NSA is probably drawing more conceptually in improving thier internal social media structure than they are contributing. What NSA has to contribute is an actual implementation of all the concepts.
Where better to apply proven system of social media application to extract collective intelligence than the public operation of government and governance?
In addition to the intelligence being provided by the NSA and the NSC to President OBAMA that is the product of our best intelligence gathering system, the emerging beauty of the internal system analysis using advanced social media concepts and applications for national security becomes an independent matter of best advice to the president consistent with and contributing to his objective of involving all of us in the government process.
Our space program had substantial spin off benefit to our society at the pinnacle of industrial development and perhaps marked the transition to its greater contribution to the emergence of information age development. Our information age development leadership organization is now the NSA. We don't see the spectacular results of that development in social media application form equal to a blast off preceded by a count down to draw the attention of a nation. It would reveal sources and methods and capabilities of internal systems that are secret.
Keeping implementations of social media concepts applied internally, with probable external extensions to support it, a national secret will not be in the national interest. When President Obama's security advisors reveal the national benefit of the system, independent of what it produces then they will really be contributing to the defense of the nation.
The only problem is that product of a collective intelligence system is by definition an indication of the most intelligent thing to do. It is also supported by structure of logic and reason and analysis that can be examined in detailed range and depth. Such a product may indicate changes to established systems that are not as well supported, or in fact do not have any rational support.
Who would have ever thought that the greatest battle between unsubstantiated faith and its greatest opponent; reason would find its emergence for the NSA? Not surprising if the basis is intelligence and discovery that the best intelligence is found in our collective thought, not the insertion of thought fallacies in individual minds that are in positions of power to force their influence.
Government doing its best to spy upon itself and reveal the intelligent thing to do might be the solution to the problem when the methodology emerges for public benefit. How will it emerge? By those doing things for us in our best interest without our full knowledge of what is driving their efforts? That is not collective intelligence.
Thief Whose Crime Improves the System?
Fairfax Financial Holdings Ltd.
Is the story here an example of a thief whose exposure may improve the system? The benefit of exposure of how it was done and made possible greater than the damage done by the thief?
Only if the lesson is learned.
When risk of loss is wrongly manipulated for gain what is more elegant than leveraging the loss to make it hurt far beyond the gain. It only works if the pain of loss bet on risk is administered. Who does the administering?
Isn't RICO leveraged punishment?
http://www.renebol.com/?p=13 extracted quote:
"Given Fairfax’s cds portfolio, it is difficult to imagine a scenario where Fairfax did not understand and try to profit from the corruption in the system. By taking cds positions against MBIA, Ambac, Radian, AIG, etc., Fairfax knew that eventually the evidence against the bond insurers would be so overwhelming that the credit agencies would have to make the downgrades and in turn trigger Fairfax’s windfall. The real exposure in the system was not reflected in the institutions that were suppose to protect investors. Fairfax didn’t so much make a strategic trade that paid off when their vision of the future became reality, as they made a trade against the corruption in the system that paid off when the obsfucation could no longer be tolerated. Smart business or profiting from the corruption of others?"
more quote:
"Fairfax might yet turn out to be a force for good. If its lawsuit against the hedge funds can expose the prevalence of corruption on Wall Street, then the court findings might lead to improved SEC regulations and enforcement. However, what is really needed is a paradigm shift that demands government take on a larger role in our lives. From finance to energy, the environment, climate change, and the Millienium Development Goals, our challenges have to be met by forward thinking governments and people willing to sacrifice profits for ethics."
Give Fairfax the "Economic Equivalent" Of the Bush "Freedom Medal". Tell them "heck of a job Fairfax" Then confiscate everything.
Is the story here an example of a thief whose exposure may improve the system? The benefit of exposure of how it was done and made possible greater than the damage done by the thief?
Only if the lesson is learned.
When risk of loss is wrongly manipulated for gain what is more elegant than leveraging the loss to make it hurt far beyond the gain. It only works if the pain of loss bet on risk is administered. Who does the administering?
Isn't RICO leveraged punishment?
http://www.renebol.com/?p=13 extracted quote:
"Given Fairfax’s cds portfolio, it is difficult to imagine a scenario where Fairfax did not understand and try to profit from the corruption in the system. By taking cds positions against MBIA, Ambac, Radian, AIG, etc., Fairfax knew that eventually the evidence against the bond insurers would be so overwhelming that the credit agencies would have to make the downgrades and in turn trigger Fairfax’s windfall. The real exposure in the system was not reflected in the institutions that were suppose to protect investors. Fairfax didn’t so much make a strategic trade that paid off when their vision of the future became reality, as they made a trade against the corruption in the system that paid off when the obsfucation could no longer be tolerated. Smart business or profiting from the corruption of others?"
more quote:
"Fairfax might yet turn out to be a force for good. If its lawsuit against the hedge funds can expose the prevalence of corruption on Wall Street, then the court findings might lead to improved SEC regulations and enforcement. However, what is really needed is a paradigm shift that demands government take on a larger role in our lives. From finance to energy, the environment, climate change, and the Millienium Development Goals, our challenges have to be met by forward thinking governments and people willing to sacrifice profits for ethics."
Give Fairfax the "Economic Equivalent" Of the Bush "Freedom Medal". Tell them "heck of a job Fairfax" Then confiscate everything.
Friday, February 6, 2009
Theft Should be Rewarded
The title defies the moral of honesty. Theft is an elegant way to test the system. A friend recently told me her feelings about travel in strange places. She said her belief was that if she lost her wallet anywhere in the world 9 out of ten people would return it to her if they found it. She has traveled extensively because she was not afraid to travel. Once her camera was stolen but it was stolen in such an ingenious manner that her recognition of the skill of the person that took it was greater than the feeling of personal loss.
Testing the system for personal gain not permitted by the rules of the system benefits the system by exposing its weakness. Any system always has a weakness. The dangerous thief is the one that kills the goose to get the golden eggs.
The thieves of our economic system test it to expose failures. Correcting failures improves the system. The economic system thieves have collapsed the system. They not only killed the goose but will choke on the last golden egg they got from it. A catastrophic event for them, maybe good for us. An opportunity but 9/11 was also. To do what is another matter.
The wise thieves that always stole golden eggs from the system are desperate to keep that system going. They did not have enough control of the crooks that worked for them. All the crooks and thieves have served their purpose to expose the failure of the economic system. If we do not change the system we are fools to be preyed upon again.
A system that makes money on money without adding value, creates money out of nothing to make more money on money without adding value is a thief skinning the cat in the most elegant manner. It is however a system that cannot grow exponentially forever and therefore will not. We all take a haircut in the end but the thieves and their opportunity to continue to steal must come to an end as a function of the system correcting itself.
The system is to big to fail. We should not confuse the system with an institution that only seems to represent it and claims to be to big to fail by claiming to be the system. It is not. We are the system. The system that makes money on money bets has to be made to go away in an elegant manner that puts the sting on them.
When all the money in the world is debt money have we got to the point where everything in the world has been gained at the cost of going into debt for losing it all?
That is the same situation that faces us in the natural world.
Will we in the end skin ourselves in the most elegant manner by gleefully jumping out of our own skin much to the amusement of the only Thing left after we are gone? The big joke would be that there is no Thing left to enjoy this ultimate elegance and It was never there in the first place. The most elegant skinning in all time and eternity and Nobody to enjoy its beauty?
Testing the system for personal gain not permitted by the rules of the system benefits the system by exposing its weakness. Any system always has a weakness. The dangerous thief is the one that kills the goose to get the golden eggs.
The thieves of our economic system test it to expose failures. Correcting failures improves the system. The economic system thieves have collapsed the system. They not only killed the goose but will choke on the last golden egg they got from it. A catastrophic event for them, maybe good for us. An opportunity but 9/11 was also. To do what is another matter.
The wise thieves that always stole golden eggs from the system are desperate to keep that system going. They did not have enough control of the crooks that worked for them. All the crooks and thieves have served their purpose to expose the failure of the economic system. If we do not change the system we are fools to be preyed upon again.
A system that makes money on money without adding value, creates money out of nothing to make more money on money without adding value is a thief skinning the cat in the most elegant manner. It is however a system that cannot grow exponentially forever and therefore will not. We all take a haircut in the end but the thieves and their opportunity to continue to steal must come to an end as a function of the system correcting itself.
The system is to big to fail. We should not confuse the system with an institution that only seems to represent it and claims to be to big to fail by claiming to be the system. It is not. We are the system. The system that makes money on money bets has to be made to go away in an elegant manner that puts the sting on them.
When all the money in the world is debt money have we got to the point where everything in the world has been gained at the cost of going into debt for losing it all?
That is the same situation that faces us in the natural world.
Will we in the end skin ourselves in the most elegant manner by gleefully jumping out of our own skin much to the amusement of the only Thing left after we are gone? The big joke would be that there is no Thing left to enjoy this ultimate elegance and It was never there in the first place. The most elegant skinning in all time and eternity and Nobody to enjoy its beauty?
Wednesday, February 4, 2009
Executive Skinning
The elegance of a thing is the effectiveness that lies hidden behind the obvious surface.
Limiting executive pay for firms receiving the bail out. For those that like punishment as a tool it sounds great. They would like skinning cats with knives while still alive. If they view it as punishment then they are happy. These kind of people like teeth in the bailout to bite.
What pay limit does is create incentive on the part of the executives not to receive bailout money. To keep the company from the position in which a bailout would be required. It also induces an executive to quit and go where the money might be better. That may open the job to someone that is not entirely interested in what the job will pay in money but in recognition, accomplishment, the value contribution to solutions. Non Monetary status. The cover of Rolling Stone. American Idol.
The ones that like the screams of the live cats being skinned will like enforcement of pay caps. The ones that would be capped in the future, which is probably far greater, will avoid the situation at all costs and do their job well to avoid it. That is elegant. Perhaps they will evade being capped by hiring lawyers to avoid getting caught.
Suggestion: Extend the pay caps to corporate lawyers.
Limiting executive pay for firms receiving the bail out. For those that like punishment as a tool it sounds great. They would like skinning cats with knives while still alive. If they view it as punishment then they are happy. These kind of people like teeth in the bailout to bite.
What pay limit does is create incentive on the part of the executives not to receive bailout money. To keep the company from the position in which a bailout would be required. It also induces an executive to quit and go where the money might be better. That may open the job to someone that is not entirely interested in what the job will pay in money but in recognition, accomplishment, the value contribution to solutions. Non Monetary status. The cover of Rolling Stone. American Idol.
The ones that like the screams of the live cats being skinned will like enforcement of pay caps. The ones that would be capped in the future, which is probably far greater, will avoid the situation at all costs and do their job well to avoid it. That is elegant. Perhaps they will evade being capped by hiring lawyers to avoid getting caught.
Suggestion: Extend the pay caps to corporate lawyers.
The Other Edge
Recent attention has been given to the exceptions to the rule for hiring lobbyists. This is just one example.
If and when it is necessary for the administration to fire anyone that serves at the pleasure of the president, restrictions on their ability to lobby, out of the office they occupied, matters related to that office becomes a very powerful incentive not to incur the displeasure of the president.
"Your fired" is a powerful statement that gains increasing power with application. Previously it might have drawn the response "Throw me in that brier patch" or "Hurt me, hurt me, I will make more as a lobbyist". If there are restrictions on post government employment use of connections with government then it can and should hurt. What use is anyone without influence in Washington? Their value becomes only what they know not who they know. Which is more important?
If and when it is necessary for the administration to fire anyone that serves at the pleasure of the president, restrictions on their ability to lobby, out of the office they occupied, matters related to that office becomes a very powerful incentive not to incur the displeasure of the president.
"Your fired" is a powerful statement that gains increasing power with application. Previously it might have drawn the response "Throw me in that brier patch" or "Hurt me, hurt me, I will make more as a lobbyist". If there are restrictions on post government employment use of connections with government then it can and should hurt. What use is anyone without influence in Washington? Their value becomes only what they know not who they know. Which is more important?
Monday, February 2, 2009
Skin 'em With Flowers
Let a hundred flowers blossom. (This is a link. One of my sisters does not know that) What an elegant way to skin a cat with flowers.
In an atmosphere of open invitation to thoughts for change perhaps senior military officers are making the greatest all time mistake in judgment. Good judgment is what an officer is paid for. Bad judgment is what he dies for.
Having forgotten their role and perhaps misjudging President Obama's open invitation for people to take their seat at the table of government and governance, maybe these guys think they have an equally open invitation to the party.
This looks like they are eager to make their own thoughts publicly known and only slightly veiled as presented through their retired surrogates.
Bad judgment will be reflected on their fitness report. Along with a comment that they are unfit to serve. Go ahead, make a third party to inflate your retirement income.
Ever heard of a general named MacArthur?
Some senior officers displayed their lack of judgment in the last administration. Are they so arrogant to think they will not be evaluated in the current one?
Admiral Rickover had a policy that an officer stayed in their position long enough for their mistakes to catch up with them. Then they were required to stay and fix them if they honestly could. To determine which ones could and would they were simply asked: Is that the best you could do? That is the hardest question to ask a truly dedicated person. Those that are not skin themselves with the arrogant answer.
Has President Obama stuck a flower in their gun barrel? One that will cause a backfire when they pull the trigger.
Shooting someone with their own rifle when it is pointed at you is the flip side of disposing of them by inducing them to fall upon their own sword. Neither is nice nor is any weapon that we live by when used for other than defense.
That is as elegant as it gets with the military.
In an atmosphere of open invitation to thoughts for change perhaps senior military officers are making the greatest all time mistake in judgment. Good judgment is what an officer is paid for. Bad judgment is what he dies for.
Having forgotten their role and perhaps misjudging President Obama's open invitation for people to take their seat at the table of government and governance, maybe these guys think they have an equally open invitation to the party.
This looks like they are eager to make their own thoughts publicly known and only slightly veiled as presented through their retired surrogates.
Bad judgment will be reflected on their fitness report. Along with a comment that they are unfit to serve. Go ahead, make a third party to inflate your retirement income.
Ever heard of a general named MacArthur?
Some senior officers displayed their lack of judgment in the last administration. Are they so arrogant to think they will not be evaluated in the current one?
Admiral Rickover had a policy that an officer stayed in their position long enough for their mistakes to catch up with them. Then they were required to stay and fix them if they honestly could. To determine which ones could and would they were simply asked: Is that the best you could do? That is the hardest question to ask a truly dedicated person. Those that are not skin themselves with the arrogant answer.
Has President Obama stuck a flower in their gun barrel? One that will cause a backfire when they pull the trigger.
Shooting someone with their own rifle when it is pointed at you is the flip side of disposing of them by inducing them to fall upon their own sword. Neither is nice nor is any weapon that we live by when used for other than defense.
That is as elegant as it gets with the military.
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