"Ready, Fire, Aim" Market Reform

by David Leinweber | comments: 3

Previous disasters, all notably less damaging than the Great Mess of '08, have led to deep serious analysis of their causes. The general notion being that understanding the causes might be useful in avoiding nasty repeat performances. This has been Standard Operating Procedure for a long time for good reason. The alternative Ready Fire Aim approach can be hazardous to your health, yet that seems to be the plan for the newly announced Financial Crisis Inquiry Commission, tasked with reporting back on the crisis that nearly broke capitalism by the end of 2010, while the legislation to avoid a financial crisis is being crafted now.
There have been more than a few comparisons with the Pecora Hearings in 1933. Pecora was a former New York DA, who as counsel for the Senate Banking Committee, had enough clout, backing and sense of mission that in six intense months, his investigation led to the legislation that established the SEC and the basis for modern market regulation. He also, famously, got J.P. Morgan to admit to not paying taxes for years, and to let a lady circus midget sit in J.P.’s illustrious lap.

Could Angelides get a midget
into Larry Summers’ lap?

A more recent comparison is the Brady Commission, appointed by Ronald Reagan less than three weeks after the crash of October 1987. Let’s take a Nerd approach and compare a few salient features of the two investigations. The details are found in the "More than you want to know" section at the end of this column.


The absence of any sense of urgency in this is odd. Back in October of 2008, the Heritage Foundation called for a Brady style commission immediately: “ Appointing a commission now would avoid losing the three months until the next President takes office.”

Now, a mere nine or ten months later, the commission has been named, but they appear to be in no great hurry to do anything. “Angelides, a former California state treasurer, said, .. he hoped to name an executive director "sooner rather than later." But he was unsure this could be done by [the first meeting on] September 17. “ Contrast this with Brady, who named his executive director, Harvard Business School professor Robert Glauber, immediately. Together they assembled an 50 person team, and delivered a report that “surprised even Wall Street experts with its wealth of detail and cogent explanations of what went wrong”. They did this on schedule, in 60 days, less time the current commission is taking to pick a director, let alone a staff.

Ten members on the commission is hardly lean and mean. Brady had four. By all accounts, Phil Angelides is an able public servant, best known as the sacrificial democrat offered up to be whacked by the Gubernator in 2006 (a choice many voters may regret, as the state sinks into the fiscal sea). But he is not exactly a heavy hitter in the arcane world of modern Wall Street. Brady’s father was a partner of John D. Rockefeller. He knew the markets, and all the players knew that Brady and his team of financial and computer trading experts could not be fooled.

Others on the current commission, while accomplished citizens all, seem distant from the core issues that came close to burying us in toxic assets. A Las Vegas investor, Chairman of an anti-virus firm, a former McCain campaign operative. One member, Brooksley Born, clearly understands what’s going on. As chair of the CFTC in 2000, she was on the losing end of a battle with Rubin, Summers and others about regulating the very activities that caused the crisis. She has “I told you so” bragging rights. We can hope that she and her commissioners have the horsepower to expose what many would still like to hide.
In many investigations, choosing an irrefutable and universally respected leader provides that horsepower.
Think of Nobel prize-winning physicist Richard Feynman in the investigation of the Space Shuttle Challenger accident. There are close to a dozen living American Nobel laureate economists, several in finance. Were any offered a job?
In a parallel bizarro world, maybe we’d have a Volcker-Buffet Commission to figure out what hit us and what to do about it? It was nice to see the wise old guys during the Obama transition. Buffet was mentioned for Sec Treasury, but they've been scarce lately. Is it too late to actually give them something to do, and hold off on changing the game until they do it?

Four short links: 31 July 2009

NoSQL, Goldman Sachs, Yahoo! Developer Products and Bing, and Alternate Reality

by Nat Torkington | @gnat | comments: 3

On this day in history, Mt Fuji exploded (781), Daniel Defoe was put in the stocks for seditious libel but was pelted with flowers (1703), the first U.S. patent was issued (1790), and the radio show The Shadow aired for the first time (1930).

1. Tokyo Cabinet: Beyond Key-Value Store -- description of Tokyo Cabinet and code examples in Ruby. More on the nosql move to leave relational databases behind for certain modern problems (such as scaling).
2. The Great American Bubble Machine (Rolling Stone) -- I know it's old hat, but read it for the poetry if for nothing else. The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.
3. Yahoo!'s Developer Program and Bing -- note from Yahoo! to developers, saying that YQL, YUI, and Pipes are safe. For SearchMonkey and BOSS they currently do not have anything concrete to tell you. I assume (and hope) that Delicious is a top-level product, not something under "search". (via Simon Willison)
4. Preparing Us for AR -- (Schulze & Webb) round up of some apps and toys that show what AR might be, unfettered by current day technological constraints.

Four short links: 7 May 2009

iPhone Rocketry, Copywrongs, Econopocalypse, and Empire

by Nat Torkington | @gnat | comments: 1

1. How To Use An iPhone To Fly RC Airplanes and Helicopters -- So I had my basic idea down. iPhone joins the Linksys router network. It gets an IP address. Then, I open up my pilot program. The pilot program interfaces with the router via SSH (I couldn’t think of a better way that has redundancy, and speed, and was already buily by someone else). The pilot program interprets what the iphone is doing, and outputs data to one of the ethernet ports of which there are conveniently 4. Rudder, Ailerons, Throttle, Elevator.
2. Economist Debates: Copyrights and Wrongs -- The Economist live debate about copyright, with the moot "This house believes that existing copyright laws do more harm than good." Public comments, voting, and new informed opinions each day.
3. How I helped build the bomb that blew up Wall Street (NYMag) -- story of the software developer behind a lot of the mortgage repackaging software. Many good lines, e.g., But even then, I was wondering why I was making more than anyone in my family, maybe as much as all my siblings combined. Hey, I had higher SAT scores. I could do all the arithmetic in my head. I was very good at programming a computer. And that computer, with my software, touched billions of dollars of the firm’s money. Every week. That justified it. When you’re close to the money, you get the first cut. Oyster farmers eat lots of oysters, don’t they?
4. Yow -- words of wisdom from John Battelle on Google as the new Microsoft: If any lesson is to be drawn, perhaps prematurely, from all this, it's that no company - or two companies - can lead a culture for longer than half a generation. After that, the culture starts to distrust the companies' motives, regardless of whether they are pure or well intentioned.

Importance of Innovation in Finance & BarCampBank

by Jesse Robbins | @jesserobbins | comments: 2

“Progress is not the mere correction of evils. Progress is the constant replacing of the best there is with something still better.” -Edward Filene

Two years ago, when we were organizing the first BarCampBank in the US, many people found it hard to believe that banks & credit unions could a place for meaningful grassroots innovation. Even crazier was the idea of organizing an unconference to begin bringing open source, transparency, identity, and community into the very closed world of banking & finance.

Since then the BarCampBank idea has turned into a movement. There have been over 14 events all over the world, and many of the ideas generated are beginning to turn into action.

To me, the global financial system is a platform that exists to “create more value than it captures”. Tim explained this in his Work on Stuff that Matters post, saying:

“A bank that loans money to a small business sees that business grow, perhaps borrow more money, hire employees who make deposits and take out loans, and so on. The power of this cycle to lift people out of poverty has been demonstrated by microfinance institutions like the Grameen Bank. Grameen is clearly focused on creating more value than they capture; not so the like of Fannie Mae and Freddy Mac, or WaMu, or many of the other failed financial institutions involved in the current financial meltdown.”

There has never been a more important time to bring meaningful innovation into the financial system, and there has never been more opportunity for our community to make it happen.

The next event is occurring this weekend (April 25-26, 2009) on Treasure Island in San Francisco.

After that, the following events are planned:

• BarCampBankVegas is set for May 2, 2009.
• BarCampBankCharleston2 is set for June 13, 2009
• BarCampBankGermany is set for October 23-25, 2009

Four short links: 4 Mar 2009

by Nat Torkington | @gnat | comments: 0

1. Wall Street on the Tundra -- Michael Lewis's long but fascinating glimpse into Iceland's rise and fall as hubris-filled banker to the world. One of the many lessons is not to believe the post-hoc explanations for success: "Icelanders—or at any rate Icelandic men—had their own explanations for why, when they leapt into global finance, they broke world records: the natural superiority of Icelanders. Because they were small and isolated it had taken 1,100 years for them—and the world—to understand and exploit their natural gifts, but now that the world was flat and money flowed freely, unfair disadvantages had vanished. Iceland’s president, Olafur Ragnar Grimsson, gave speeches abroad in which he explained why Icelanders were banking prodigies.". For more on the financial meltdown, also read The Real Cause of the Financial Crisis--it's spot on.
2. The Cult of Done Manifesto (Bre Pettis) -- magnificent call to arms for JFDI, Just Do It.
3. Twilio -- your web apps can trigger voice calls and respond to incoming calls through a simple REST and XML API. It's wildly simple. Using it, This Line Is Secure was able to launch very quickly. I'm still not able to think in terms of phones, unable to see when a voice-drop or numeric-key interface works for an app, but I'll bet that playing with Twilio will help me develop that sense without the cost of Asterisk hardware.
4. Let Startups Bail Us Out -- Reid Hoffman writes in favour of ensuring an adequate supply of startups. "Consider a few start-ups from the past century: Microsoft, MTV, CNN, FedEx, Intel, Hewlett-Packard, Burger King. Each opened during a period of economic downturn. Today, these brands employ hundreds of thousands of people worldwide. We need to prepare for the next Burger King. By empowering individuals and small businesses, an innovation stimulus can help germinate stable industry players for the long term." (via Caterina)

Why I Support Barack Obama

by Tim O'Reilly | @timoreilly | comments: 274

In my talks this year, I have been outlining some of the world's great problems, highlighting some of the things that are being done by technology innovators to solve them, and urging my listeners to "work on stuff that matters."

We are in unprecedented times. And folks, I'm sorry to say that the current financial meltdown is not the worst of it. Political instability around the world, wars over access to resources, and yes, terrorists, are all in our future. Scientists who've studied global warming agree that we're heading towards decades of extreme environmental stress, leading to even more severe economic disruptions than we have seen to date. Meanwhile, we have an aging population with ballooning healthcare costs, an unfair economy in which some people receive outsized gains while others fall behind, an educational system that is not preparing children for the future, and deficits that require an increasing percentage of our tax dollars to service debt to other countries. Even if there is a short term recovery, huge problems loom in the years ahead, problems we can no longer pass off to our children and grandchildren.

Faced with these problems, we need a president who can harness the best and brightest our country has to offer, a president who is conversant with, and comfortable with, the power of technology to assist in solving these problems, a president who is good at listening, studying, and devising solutions based on the best insight available, rather than on narrow ideology. We need a president who can forge consensus, not just among the partisans in our own fractured democracy but around the world. We need a president who can inspire our citizens and our global partners to forgo narrow self interest and embrace the possibilities that we can achieve if we work together to build a better future.

I believe Barack Obama is that president. He is a man of intelligence, but also a man whose character and temperament seem suited to the problems of our age: unflappable, optimistic even in the face of adversity, willing to speak the truth about subjects that have long been taboo (I'm thinking of his speech on race, and his speech on fatherhood) and with unscripted reactions that show his fundamental decency (I'm thinking of his reaction to those who wanted to make a campaign issue of Sarah Palin's daughter's unplanned pregnancy.)

Because this is a tech blog, not a political blog, though, I primarily want to address the subject of why members of the technical community should join me in supporting Barack Obama. (The New York Times has made a compelling case based on the broader issues, as has Colin Powell.) I outline four principal reasons:

1. Connected, Transparent Government
2. The Financial Crisis
3. Climate Change
4. Net Neutrality

I will also discuss some important additional considerations, personal and political, that I hope Radar readers who don't want to see politics in these pages, will forgive.

I want to be clear that this is my personal endorsement, and not an endorsement by O'Reilly Media. I'd like O'Reilly to be a company where people of all political persuasions are welcomed and supported, and feel free to express their personal opinions, as I have here.

(continue reading)