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Before we start making plans for Andromeda-crash watching parties, let's not forget that at about the same time our sun will become a red giant and expand to beyond the orbit of Mars.
The equation was not at fault: the output is only as good as the inputs. The real problem was the instruments being traded: credit default swaps. These are of dubious merit and much more complicated than more traditional underlying instruments (the thing on which you hold an option contract). For example, suppose you have an option to be 100 shares of Google at a given price. It's easy to evaluate the value of the underlying instrument because there's an efficient market for it: Google is traded on a public exchange and the value is agreed upon within a penny, generally. Black-Scholes works on Google options just fine and you can minimize your risk reasonable well using it.
The credit default swaps were much more difficult to evaluate because of the lack of an efficient market for them. The essential nature of the underlying instrument were very high risk mortgages, not too different in concept from so-called junk bonds. The potential return was high because the interest rate was high. The potential risk was high because the risk of default was high, making the underlying instrument worth very little, much less than face value. So take these risky mortgages and then buy insurance policies for them, this is standard practice. That hedges the risk of the actual mortgage itself. Bundle the mortgage and the insurance policy up into a quasi-mutual fund like product: you have x number of mortgage/insurance policy bundles with average risk of default at y. Getting more difficult to put a value on, especially since there is no regulated exchange for them and little oversight.
Not done yet. Add in that deregulation rules passed during the Clinton era allowed the banks that issue the mortgages and buy the insurance policies to also use their assets to trade on their own. This group within a group is called "proprietary trading". So, the prop-trading groups within the banks buy and sell the mortgages and insurance policies to each other in order to generate income for the bank. There are also other groups that buy and sell these instruments that don't actually issue mortgages. These are called speculative traders.
Finally, to put the finishing touches on this pile of doo, have a group create a new instrument: a binary option (it does or it doesn't) on a bundle of high-risk mortgages and their insurance policies. A binary option is essentially a gamble: it pays out if something happens, it does not pay out if something doesn't happen. Now you're buying and selling options contracts which predict whether a group of mortgages will fail or not. There's no regulation, no formal exchange (which helps create market efficiency). There's no reliable way to determine the value of the underlying instrument because it depends on knowing how many of the mortgages will fail. And don't forget that the banks were using their investment customers to create demand for a product they wanted to sell ("I think you should invest in such-and-such") without telling the customers that the banks themselves would be profiting by selling questionable instruments to their own customers.
This is the magic of unregulated capitalism (almost - the banks should have been allowed to fail in a purely unregulated capitalism system). Nothing wrong with Black-Scholes here. The real problem at the core is that the banks involved are so driven by short-term success that there is no room for sanity. Wrap it all up with the fact that the banks know they will be bailed out by the Feds if they fail. There is no penalty for risk and no regulatory oversight. Gotta have one or the other or we just plain deserve this insanity.
If you're against Christian teaching and you think you're an analytic thinker, I challenge you find out what's wrong about the content of the bible and find an convincing argument why people who believe in Christ are doing it in vein. If you want to show that the bible is made up, or its text is corrupt, I'm going to put you through scientific method process and axiomatic logic reasoning to establish your case.
Christianity as a belief system is not scientifically testable because its assertions are not falsifiable. The fundamentals of the belief system:
- - Jesus Christ is the son of God
- - God sent Jesus to Earth to save the souls of humanity
- - Jesus died, came back to life, and left Earth
- - If you believe in all those things, you will live forever
We can quibble about wording, but I think that's the general idea. It's fine with me if you want to believe all those things, but let's not go mixing science in there. By definition, these religious beliefs cannot be scientifically validated because the hypothesis cannot be proven false. For example, how do you set up an experiment to prove or disprove that Jesus was the son of God? You either believe it or you don't, but that's not science. You must be able to design a test that clearly demonstrates your hypothesis is true or false.
I kind of think that Mr Hawley learned some things
Wouldn't that be the sign of an open mind and, accordingly, be laudable?
Indeed. If the government began a program to spy on everyone domestically, it would undoubtedly cause a huge uproar, and likely be deemed unconstitutional ( at least I hope it would be deemed as such. )
The Patriot Act essentially allowed the government to do exactly this and without too much uproar. Specifically:
- Title II Section 225 - Immunity for compliance with FISA wiretap
- Title V as it pertains to National Security Letters (NSLs)
I guess I could go on but I threw up a little in my mouth and had to stop.
I hesitate to admit that I don't hate Unity as much anymore. It's now more of a vague dislike: miss the menu where I can find the app I want, find Unity's desire to maximize any window I touch annoying, and, most of all, the menu proxy is difficult to use in combination with focus-follows-mouse (menu changes on the way up to the top bar if I mouse over any other window).
I find I just don't hate it enough to maintain my used-Linux-for-15-years snobbery.
For example, Iran is primarily Shiite. So is a large proportion of the population of Iraq which is next door. Therefore it is natural for the nation of Iraq to form close ties with Iran.
Heh, Iran and Iraq was at war for 8 years in the 1980s including chemical warfare. Saddam was no friend of Iran either, for as long as he was in power.
Yeah, both Muslims, but different flavors. Saddam and his crew were Sunni despite the fact that Iraq is majority Shiite. Now that he's gone, the government in Iraq, when it finally emerges, will likely by Shiite, reflecting the majority of the Iraq population. The natural assumption is that Iraq and Iran will strengthen ties.