Rickards on Global Sovereign Debt

It's one thing to read tin-foil hat blog posts about the impending collapse of the global economy. It's another to watch the same message from James G. Rickards, a (seemingly) intelligent and credible source.

I liked Rickard's approach of using dynamic systems theory to analyze global markets and economies. The technique changes the conversation from a philosophical one (i.e. Keynesian vs. Monetarists vs. Austrian) to a scientific, empirical one.

To summarize, Rickards says we're screwed. Decades of deficit spending and the bailout have led to the accumulation of an unsustainable amount of debt - no combination of growth and taxes that can satisfy the liability. Rickard's makes the point that this debt can't magically disappear, it has to be flushed from the system either through default, inflating currency, or debtors and creditors going to war. This sounds sensational until Rickards explains how this happened multiple times in the 20th century alone.

Scary stuff but worth watching. Wishful thinking isn't going to fix the current economic situation. I much prefer a data based approach to understanding and solving the problem. I hope Rickard's is wrong but, if not, I hope someone is listening.

Shared Keyboard Madness

I'm not alone in my mechanical keyboard madness. Arstechnica posted a good video about ergonomic keyboards. Their recommendation? Mechanical switches and a split layout.

I'm really enjoying the Kinesis Contoured keyboard. The wrist pain I was experiencing has disappeared. I only wish I had a second one for home as it is now uncomfortable to go back to using the MS Natural Ergonomic - the rubber dome keys require a lot more force.

More Watson

There is a lot of good information available online about Watson. Many of my friends have wondered about Watson's wagering algorithms so I was happy to find this blogpost and video by IBM research. I find Watson's avatar endearing, this video on its creation was fun to watch.

Part of me wonders if (read hopes that) Watson will inspire a whole new generation of AI researchers.

Watson Wins!

Well, Watson won Jeopardy!. It's an amazing feat. I look forward to seeing where IBM takes the technology.

NOVA has made their episode on Watson's creation free to watch online. IBM has posted a YouTube video of a talk by Dr. David Ferrucci on the overarching DeepQA project. Ken Jennings, one of the human contestants, gave an entertaining live Q&A.

I would love to write software for a system like Watson. As a kid, I was fascinated by fictional super-intelligent computers like HAL, WOPR, and MCP. Over the past year, I've rediscovered a strong interest in data mining and machine learning. While I've helped develop server and storage systems capable of hosting such applications, I have not yet worked with these technologies directly. This is something I'm considering as part of my annual career planning.

Andrew Lo, Kill the Quants

A good talk by Andrew Lo, Director of the MIT Laboratory of Financial Engineering, on the merit of blaming quantitative methods for the subprime crisis.

Lo main assertion is that,

"blaming quantitative methods for the financial crisis is like blaming accounting and the real number system for accounting fraud"

Instead, he suggests blaming the people that used the methods inappropriately rather than the methods themselves. From what I've read of the subprime crisis, I agree.

Lo partially demystifies the subprime crisis by using a simple example to explain collateralized debt obligations. He demonstrates how pooling loans and securitizing them into new bonds in multiple traunches can produce both higher and lower quality investments. He explains that it was securitization that allowed subprime loans to find their way into low risk funds like pensions and money markets. He also demonstrates how the method fails when the underlying loans are highly correlated.

Lo then discusses the crisis preconditions that Charles Perrow puts forth in his book "Normal Accidents",

• Complexity
• Tight Coupling

To this Lo adds an additional precondition,

• The lack of (frequent) negative feedback

Lo asserts that under these conditions, human behavior naturally leads to crises like the one in 2008. His points greatly reminded of those made by Richard Bookstaber in his book "A Demon of Our Own Design". I found Lo's argument compelling. Without frequent negative feedback, conditions build to a point where proactively unwinding them becomes impossible - the cost is too great to actively decide to incur. The cost inevitably comes but without conscious action.

In closing, a great talk worth watching.

More Keyboard Madness

Last March, I posted about a growing keyboard obsession and decision to buy a Filco Majestouch mechanical keyboard. Well, the madness continues. I am now the proud owner of a Kinesis Contoured Advantage.

The Filco is a high quality keyboard. The Cherry Blue switches feel great but are indeed noisy - not ideal for late night hacking at home. Actually, even day time hacking was frowned upon by my family. Luckily, I got a closed door office at work which allowed me to use the Filco all day without driving others crazy.

Unfortunately, I started experiencing wrist pain and the evidence pointed to using the Filco. The ergonomic people at work set me up with a keyboard tray to promote better hand positioning. That helped but I felt "trapped" in the "correct" position. Not only did I still have wrist pain, I was even more uncomfortable.

Frustrated, I switched back to using a Microsoft Natural keyboard. The pain subsided but the rubber dome keys felt awful after typing on the Cherry switches. The extra force required to press the keys was noticeable and tiring.

I considered pre-ordering a Truly Ergonomic keyboard but I didn't want to be an early adopter. I'd rather wait until there are many reviews.

I mentioned in the March post that I've long wanted a Kinesis Contoured Advantage keyboard. They look really cool but, more importantly, have many positive reviews online. I decided that it was finally time to try one.

I've been using the Kinesis for a couple of weeks and really like it. The Cherry brown switches feel as good as the Filco's blue switches but without the noise. I really like the thumb keys and use my pinky fingers much less. I remapped the CTRL and ALT keys to the same positions on both thumb pads. Using Emacs and org-mode is now easier and faster. Most importantly, the wrist pain is fading.

It didn't take as long to adjust to the Kinesis layout as I feared. After a couple of hours, I was typing at my usual rate. Switching back and forth between the Kinesis and regular keyboards does take some adjustment but it appears to be getting easier.

The Kinesis may well be my ideal keyboard. Now I'm wondering when I should consider switching to a Dvorak layout. A challenge for another day.

Where's Johnny?

I've been neglecting this blog lately. Instead of posting, I've been spending my rare spare time exploring multiple interests. Specifically, clojure, data science, and quantitative investing.

I'm hoping to combine these interests and post about them in the near future.