Went and saw Wall Street 2 last night. Michael Douglas does an especially credible job as ex-trader convicted of financial felonies. The phenomenon of greed, addiction to money, is especially interesting to me because, unlike casino gambling, there is supposed to be SOME rationale to the chaos on the trading floor. In principle, the financial market operates on the basic principle that investors (people with money to spare) put money into the hands of creative enterprises (people who need money) and may reap a reward for taking a risk. But is Wall Street still respecting the ground rules above, or has it gone crazy?
The case against Wall Street insanity: The large bonuses transferred to traders and CEOs are what the free market dictates. Think traders are payed too much? Fire him/her, he/she'll find just as good a pay elsewhere doing the same thing. That's exactly what competition does, and it's efficient in determining who gets payed what! Worried about the ups and downs of the market? Relax, that's just the nature of the market, the name of the game, the Yin to your Yang, the Ken to your Barbie ... uhhmm, never mind. Just remember to buy low and sell high! And keep in mind that any intervention by a socialist government distorts the market and skews it away from what it should be – a free exchange of capital and shares that ultimately and automatically picks winners and losers. America is a prime example of what capitalism can achieve. And where would America be without markets that allowed entrepreneurs to leverage large sums of money, put them to good use, grow the economy, and increase tax revenues for governments? Yes, the market creates inequalities between people, but that's just the American dream – the market does not pick winners and losers at random, it picks the people who work the hardest, have the better ideas, and are willing to take risk to achieve their objective.
The case for Wall Street insanity: What the market IS and what the market SHOULD BE are two different things. And the current financial markets are anything but free if your definition of free is that all information is equally available to all market participants all the time. Insider trading cannot be dismissed as nuisance noise as even a single trader can move billions of dollars around at a single click of the mouse. Even after the most recent market crash, the regulating instances such as the SEC are a pale shadow of what they should be with respect to investigating and punishing white-collar crimes. Worse of all, speculation remains unchecked, and it kills ... it really does because speculative valuation - economic bubbles being one example – distort the market like no government intervention ever could, and with horrifying results when the thing goes "pop". If your mutual fund tracked the Dow Jones Industrial Average (DJIA), the ups and downs took you on quite the risk joy ride, haven't they? But for all that risk you put your money through, the DJIA (and your portfolio) is no higher now than it was over 10 years ago. Why? Many reasons, but methods relying on lightening-quick computers and fancy mathematical models haven't helped – hedge funds and high-frequency trading, to name a few, drain profit from the market and effectively act as a tax on you, the small investor. The recent economic crash shows that markets cannot regulate themselves – without a "socialist" government intervention, the financial sector would be dead, along with most of the American economy. All these are only some examples of what Wall Street should NOT be. But sadly it is.
Verdict: The concept behind capital markets is probably not insane, but we hold the right to review that one in the future. What is insane is current Wall Street where the market is not viewed as something to grow the economy and make the country prosper but as something to be exploited for short-term gain. Traders do not speak in terms of the next 25, 50, or 100 years but in terms of milliseconds or microseconds. There is a litany of tools – shorts, options, derivatives – that have legitimate uses but can compound risk and can have devastating effects in speculative settings. There are other tools – mortgage-backed securities, collateralized mortgage obligations (I personally just call it SRMM, or "systematic risk mystery meat) – that are just designed to fuck you and the rest of the world up the ass but that some greedy mother fucker will gladly sell you to make a buck. There's so much more to say, but it should be obvious how insane Wall Street already is.
My worry here is how do you keep greed and speculation out from an otherwise pretty good idea – the free market? Maybe we are just witnessing the logical extension of a system that preys on the basest of human instincts and that is predicated on ever-lasting growth on a planet with finite resources. If financial consultants aren't worried about that when they talk to you about your financial future, then they're insane too.
So there you have it, Wall Street. You know who you are, and you've been "Certified Crazy". And we're not happy.
Sunday, October 3, 2010
Wednesday, September 29, 2010
And the third "Certified Crazy" award goes to ... me! And perhaps you.
Yes, I've nominated myself, and the jury has unanimously declared ME the third winner of the Certified Crazy awards. Woohoo!!
The case for my insanity: The environment is going down the crapper, basic human rights are being violated on an increasing scale, the discrepancy between rich and poor has never been wider, people in my very own city would benefit from a sliver of my time in many ways ... and I spend a chunk of my time freakin' BLOGGING? By that count, I'm pretty insane (and I'm only telling you half of it).
The case against my insanity: To shield myself from the looming finger pointing at my insanity, I invoke the magic of what I call "moral bubbles". Think about a professional sports player (just avoid basketball if you can help it). Is it "fair" for this million-dollar salary player to ask for more cash if he makes less than his objective market value? In the moral bubble that only includes millionaire players, yes of course it's fair to ask for more. But if your moral bubble encompasses things like children who have no access to basic needs such as food, water, and medication ... well that player looks like a moral boob doesn't he? As far as I'm concerned, I can't spend my time saving the world, and I'm free to select whatever moral bubble suits me. That's my story, and I'm sticking to it.
The verdict: Moral bubbles are conveniences ... blinders that we put on to avoid dealing with the moral implications of what we do. And the sad truth is that we all have our moral bubbles, and precious few of us have the courage to expand our moral bubbles to the point where we have to give up some of our personal comfort. In the grand scheme of things, I personally don't expand my moral bubble very far, and while it's true I can't sacrifice every waking second of my life fighting against some of the embarrassingly simple-to-solve evils that plague this earth, how do I explain the apathy that prevents me from doing a little more? Well, how about insanity?
There you have it, people. I'm Certified Crazy ... lemme know if you feel the same.
The case for my insanity: The environment is going down the crapper, basic human rights are being violated on an increasing scale, the discrepancy between rich and poor has never been wider, people in my very own city would benefit from a sliver of my time in many ways ... and I spend a chunk of my time freakin' BLOGGING? By that count, I'm pretty insane (and I'm only telling you half of it).
The case against my insanity: To shield myself from the looming finger pointing at my insanity, I invoke the magic of what I call "moral bubbles". Think about a professional sports player (just avoid basketball if you can help it). Is it "fair" for this million-dollar salary player to ask for more cash if he makes less than his objective market value? In the moral bubble that only includes millionaire players, yes of course it's fair to ask for more. But if your moral bubble encompasses things like children who have no access to basic needs such as food, water, and medication ... well that player looks like a moral boob doesn't he? As far as I'm concerned, I can't spend my time saving the world, and I'm free to select whatever moral bubble suits me. That's my story, and I'm sticking to it.
The verdict: Moral bubbles are conveniences ... blinders that we put on to avoid dealing with the moral implications of what we do. And the sad truth is that we all have our moral bubbles, and precious few of us have the courage to expand our moral bubbles to the point where we have to give up some of our personal comfort. In the grand scheme of things, I personally don't expand my moral bubble very far, and while it's true I can't sacrifice every waking second of my life fighting against some of the embarrassingly simple-to-solve evils that plague this earth, how do I explain the apathy that prevents me from doing a little more? Well, how about insanity?
There you have it, people. I'm Certified Crazy ... lemme know if you feel the same.
Tuesday, September 28, 2010
And the second "Certified Crazy" award goes to ... casino players!
I've made my way to the local casino with a friend for something that we tongue-in-cheekily call our "sociological" study. It's really nothing of the sort, but people watching makes for good fun. But are casino players crazy?
Case for casino-players insanity: The odds are against you. If you keep playing, you will loose money, period. I've never understood the idea behind cheering for luck - by definition, luck is a purely random process unaffected by wishes or actions. I do understand the thrill of a win, but unlike the lottery, casinos usually requires investing a fair sum for a relatively small potential gain. The lottery is the opposite (small sum invested for potentially huge rewards) and makes somewhat more sense. What strikes me about the casino is that the odds and the cost/benefit ration do not seem to be adjusted to reward the customer very well. The reward is more primal (when it happens), and it seems to me that the phenomenon of gambling has some of the components of addiction in that there is little pleasure in gambling on a sustained basis, but one must engage in the habit nonetheless to avoid withdrawal.
Case against casino-players insanity: Some people get a kick out of making a wager, and some of those people spend a reasonable amount ($50?) there are perfectly willing to pay/loose in the form or entertainment money. So be it. I'd still like to understand the thrill behind the idea. In many ways, it reminds me of religion – the previous Certified Crazy award winner (religion) owes its success in part on the trick that it is well-nigh impossible to disprove the existence God. Same thing goes for the next gamble: the winning game might just be around the corner, and you can't disprove that it's not. In both cases, however, failure to disprove something does not make it true, with the predictable consequence that the insanity endures.
Verdict: Gambling is unproductive at its best and an illness at its worse. People come to gambling from a variety of background for a variety of reasons, but overall it remains a destructive mechanism by which casino owners enrich themselves at the expense of people whose brain reward mechanisms are vulnerable and too easily hijacked.
And so, casino players, you know who you are, you've been Certified Crazy!
Case for casino-players insanity: The odds are against you. If you keep playing, you will loose money, period. I've never understood the idea behind cheering for luck - by definition, luck is a purely random process unaffected by wishes or actions. I do understand the thrill of a win, but unlike the lottery, casinos usually requires investing a fair sum for a relatively small potential gain. The lottery is the opposite (small sum invested for potentially huge rewards) and makes somewhat more sense. What strikes me about the casino is that the odds and the cost/benefit ration do not seem to be adjusted to reward the customer very well. The reward is more primal (when it happens), and it seems to me that the phenomenon of gambling has some of the components of addiction in that there is little pleasure in gambling on a sustained basis, but one must engage in the habit nonetheless to avoid withdrawal.
Case against casino-players insanity: Some people get a kick out of making a wager, and some of those people spend a reasonable amount ($50?) there are perfectly willing to pay/loose in the form or entertainment money. So be it. I'd still like to understand the thrill behind the idea. In many ways, it reminds me of religion – the previous Certified Crazy award winner (religion) owes its success in part on the trick that it is well-nigh impossible to disprove the existence God. Same thing goes for the next gamble: the winning game might just be around the corner, and you can't disprove that it's not. In both cases, however, failure to disprove something does not make it true, with the predictable consequence that the insanity endures.
Verdict: Gambling is unproductive at its best and an illness at its worse. People come to gambling from a variety of background for a variety of reasons, but overall it remains a destructive mechanism by which casino owners enrich themselves at the expense of people whose brain reward mechanisms are vulnerable and too easily hijacked.
And so, casino players, you know who you are, you've been Certified Crazy!
Sunday, September 26, 2010
And the first "Certified Crazy" award goes to ... organized religion!
We hesitated to nominate a specific individual for the very first "Certified Crazy" award because we would hate to cause strife or dissent on a small scale. Rest assured that the "Certified Crazy" awards will evaluate your personal case soon. But our big winner tonight might just be the best of batty, the dean of deranged, the loopiest of lunacies, the mother of mental - organized religion!
The awards are not a contest per se because, as far as crazy goes, everyone's a winner. Instead, as with every "Certified Crazy" award, a nominee's portfolio is sent to a jury who then evaluates whether the candidate brings enough loose screws to deserve a place in the "Certified Crazy" Hall of Fame.
In the case of tonight's nominee - organized religion – the jury summarized its thoughts and verdict as follows:
The case for religious insanity: The principle weakness of religious beliefs is the lack of any evidence for a supernatural actor in human affairs. Clever theists argue that one cannot disprove the existence of God, and that's true. The noted scientist Richard Dawkins argues that if one happens to believe in a god called the Orbiting Celestial Teapot, you would be hard pressed indeed to prove it does not exist. But it wouldn't make the Orbiting Celestial Teapot god, or the Flying Spaghetti Monster god, or any other god for that matter, any more real. Cannot explain the diversity of life on the planet? No problem, God created plants, animals, and humans just like that! Worried where your soul goes after you die? No problem, God created just the place for it called eternity. For centuries, religion has exploited human ignorance to offer a soothing ready-made but illusory explanation called God.
The case against religious insanity: Everything has an origin and therefore a creator. Creating the world requires great power, and we call this power "God". From here, accounts from various religions differ. Some organized religions, for instance, summon an "interventionist" God interested in human affairs and who is susceptible to be influenced by prayer or tribute. Other religions invoke a more disinterested force or energy that permeates everything and either acts benevolently or can be harnessed to influence their lives and those of others. A few holy books state the existence of God. Most people believe in God in one form or another, and billions of people can't be insane.
Verdict: There is neither evidence for God nor any need to invoke God to understand how the world works. Science has replaced most religious accounts of the world with more sensible evidence-based theories and facts. There is simply no basis to think that God hides in the ever-receding boundaries that science does not yet explain. This jury, as would any rigorous court of law, rejects the notion that God exists based simply on lack of evidence alone. Religious beliefs are therefore deemed by this jury as an especially outrageous form of insanity.
So all you religious folks, you know who you are, you've been Certified Crazy!
The awards are not a contest per se because, as far as crazy goes, everyone's a winner. Instead, as with every "Certified Crazy" award, a nominee's portfolio is sent to a jury who then evaluates whether the candidate brings enough loose screws to deserve a place in the "Certified Crazy" Hall of Fame.
In the case of tonight's nominee - organized religion – the jury summarized its thoughts and verdict as follows:
The case for religious insanity: The principle weakness of religious beliefs is the lack of any evidence for a supernatural actor in human affairs. Clever theists argue that one cannot disprove the existence of God, and that's true. The noted scientist Richard Dawkins argues that if one happens to believe in a god called the Orbiting Celestial Teapot, you would be hard pressed indeed to prove it does not exist. But it wouldn't make the Orbiting Celestial Teapot god, or the Flying Spaghetti Monster god, or any other god for that matter, any more real. Cannot explain the diversity of life on the planet? No problem, God created plants, animals, and humans just like that! Worried where your soul goes after you die? No problem, God created just the place for it called eternity. For centuries, religion has exploited human ignorance to offer a soothing ready-made but illusory explanation called God.
The case against religious insanity: Everything has an origin and therefore a creator. Creating the world requires great power, and we call this power "God". From here, accounts from various religions differ. Some organized religions, for instance, summon an "interventionist" God interested in human affairs and who is susceptible to be influenced by prayer or tribute. Other religions invoke a more disinterested force or energy that permeates everything and either acts benevolently or can be harnessed to influence their lives and those of others. A few holy books state the existence of God. Most people believe in God in one form or another, and billions of people can't be insane.
Verdict: There is neither evidence for God nor any need to invoke God to understand how the world works. Science has replaced most religious accounts of the world with more sensible evidence-based theories and facts. There is simply no basis to think that God hides in the ever-receding boundaries that science does not yet explain. This jury, as would any rigorous court of law, rejects the notion that God exists based simply on lack of evidence alone. Religious beliefs are therefore deemed by this jury as an especially outrageous form of insanity.
So all you religious folks, you know who you are, you've been Certified Crazy!
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