Unlike some of the posters, I do not have a clear opinion or understanding of exactly finance does for us, especially the part of finance that is done by MIT graduates. I have heard two opposing claims which I put into two opposing categories.

Is it:

* Finance is a fraudulent game designed to fleece others out of their money using complex financial instruments that cannot be understood by those who have the responsibility to prevent fraudulent activities in our financial institutions.

or:

* Finance more efficiently distributes money into investments in our economy so that our resources are more efficiently organized to maximize productivity. Complex financial instruments are used to distribute risk and allow creators of goods and services to protect themselves against risks which would otherwise potentially destroy their ability to provide those goods and services.

The problem is that I believe each of the above statements are true at least to some extent. What I don't know is the percentage to assign to each category or to some new category in between these two polar opposites of categories of results. In particular, I do not how mathematical financial engineering is distributed among these categories in terms of effective output.

If the best and brightest are being hired merely to create profit for the few and have no positive impact on the wealth of the many, then I believe that is wrong and I cannot see justification for this as a moral good. I cannot see any essential difference between this and successful recruitment efforts by the Mafia for new well paid enforcers. An enforcers job might be fun, have good comradeship, work with the "best", and be well paid, but it still does not make it a morally acceptable choice of occupation.

So for me, the key question is whether the mathematically complex part of finance is actually performing in the way capitalism is intended to perform or are the complex algorithms used to better enable parasites to enrich themselves at the expense of the larger body politic. Factual information on this is actually somewhat hard to come by. Certainly I have seen a lot of claims about CDOs, risky mortgages, investment pools, arbitrage and the root causes of recent failures. But when I try to dig a little further, real information based on real data is quite hard to find.

I'll give an example. One typical trick for extracting unfair money from others is to design an investment that pays better than average as long as a seemingly unlikely event does not occur. You get others to put money into the investment by lying or disguising the true risks about whether the event will occur. You then take a portion of the money that investment as your own (as a "fee") and then create a complex derivative to bet against the investment by buying "insurance that pays off if the event occurs". How much of the profit made by financial companies is made from tricks of this sort?

In particular, what percentage of the recent instability was caused by CDOs that packaged risky mortgages and how well did some of the principal players understand the true nature of the risk? Again, I can get vociferously stated opinions on this but I am finding it hard to find real fact. However, in defense of the financial industry, it seems very few were aware of the true risks of the mortgages and many of them lost considerable money (maybe not as much as they should have) after the crisis. But there were some who knew what was going on and many (even though ignorant about what was truly going on) who profited while the times were good who did not suffer proportionally when things went bad (the "private profit" and "socialized risk" that a couple of posters alluded to).

I do have one more thing to say. There is an old saying, "Democracy is the very worst form of government with the exception of all others". I have a similar opinion about capitalism. Capitalism is prone to "bubbles" that grow and burst and this seems to be inherent in its nature. When seen this way, the recent mortgage crisis can be seen as just another one of those "bubbles" and it is not clear to me that the finance industry really deserves the blame that is heaped upon them. It feels a bit to me as if they are being used as scapegoats for what is otherwise a fairly predictable phenomenon. Of course, many in the financial industry like to claim that they are smarter and wiser and know how to protect your investments against such risks and for that they should be culpable when they are proven wrong.

A lot of responses that I have seen to this question are basically the following.

"Create your own CA (certificate authority) certificate and distribute them to the client workstations." Then they accuse the original poster of having asked an overly simple and uninteresting question.

I am going to say something nobody else seems to have said. SSL sucks big time for large workgroups inside a private intranet. It is an inappropriate solution that is being used for the lack of anything better. IE will give AD based authentication for browsers, but did not extend that to securing the communication channel itself.

This issue is much nastier and more complex then anybody has allowed for. SSL does a very good job of solving the problem of creating secure communications over untrusted anonymous networks. However, they are a real pain when the only thing you want to do is create a secure communication between two machines in the same room. In those cases, SSL comes with a lot of overhead that is really not needed. In the case of two machines in the same room (or workgroup), the machines are already on internal corporate IP addresses, so a lot of the issues that SSL was designed to solve (validating that the IP address really points to the expected entity) just are not applicable. Usually the only reason why you want to encrypt the data is so that somewhat private data won't be sniffed by other users. You are not trying to prove that you are a legitimate seller of any goods or services.

What really astounded me were the claims that it would be easy to get users to accept company controlled installs of browsers and tools. I have worked in such an environment and it was actively resisted and foiled because the choices were so limiting. For those who say "it would work it was done right", probably have not done cross browser development where you had to test on Linux, Mac, and variants of Windows machines. Nor have they done Java development where the Java has to communicate to the server (over https) as well (Java has its own client CA chain distribution).

Every place I have ever worked (big or small) has had http web sites when they really should have been https because of the pain of trying to use SSL. To say that this is because of bad IT management I think gets it wrong. SSL is a bad fit for this problem space and browsers (and Java) need to support other security solutions. It would be nice to recommend Kerberos, but Kerberos has really only gotten full implementation with AD and is even more painful for client adoption in most (with non Microsoft machines in the mix) real world scenarios I have seen. The state of intranet security is broken at its foundations and the proposed solutions that have been suggested here would not work (in practical, reliable, real world usage) for many workgroups working inside a much larger corporate entity.

There is another big difference between C# and Java. In Java, you are strongly discouraged from making native calls. For example, instead of using the native desktop GUI widgets, Java writes a large wrapper (Swing) around the desktop interface and tries to port all that complexity from platform to platform. In C# on Windows, I make Windows (C# friendly wrappers -- but still Windows) specific calls if I am trying to create a GUI user interface. Similar points go for certain other APIs such as ADSI, network pipes, registry, HTTP, and encryption. In fact, if you look at the general low level Windows APIs, there is a lot of functionality there that is not captured in Java.

I agree that C# is better than Java at doing the basics, but C# is hard to separate from the platform that birthed it. This makes C# a difficult language to deal with if you are not writing for a Windows platform. For example, from my understanding, the port to Linux of C# is not to make applications portable from Windows to Linux (except maybe some server apps), but to make C# a productive language for Linux the ways it is for Microsoft. I expect to call native Linux APIs from C# when I am running on Linux. Why not? The benefit of doing otherwise is not so clear given the general lack of portability of C#. This approach does create stress points. The .net API is a large collection of APIs, some of which run on Linux on C#, some that don't. Some are protected by GPL like licenses so you can use them without a fear of a lawsuit, others are not. As an example, I think there are still some controversies about some of the fancier parts of the WebForms APIs (some of the complicated dynamic HTML tables for example).

This post is in response to posts that say "Java is not important -- if we kill Java it won't matter that much". I disagree and the fact that Oracle is preventing the language from growing and potentially killing its future is big news and should not be dismissed lightly.

There is a saying, "democracy is the very worst form of government with the exception of all others." I have a similar opinion about Java.

Let me list four key strengths that Java has:

1. If you write code using primitives (such as byte arrays and char arrays) you can write parsing and syntax processing code that has near C-like performance. This applies to other tasks that need high performance such as querying or processing data. It is why higher level scripting languages can be written on top of Java.

2. It eliminates a lot of the dangerous, painful, and unstable aspects of programming in a non scripting language like C. It does garbage collection and does not allow you to corrupt your application memory or your heap in hard to detect ways. It provides clean stack dumps when errors do occur and prevents the application from crashing from silly programming mistakes.

3. It has excellent threading and synchronization support that can be used in a flexible and high performing way.

4. It can run on more than one platform with some success.

Other alternatives do not provide all four of these features (C# misses out on #4, Ruby, Python miss out on #1 and #3, and so on). I am not much of a fan of some of the libraries that have been built on Java (such as J2EE). Google and Eclipse's use of Java is much closer to how I think Java is supposed to be used for development projects. Because of the bad reputation that some Java libraries (such as J2EE and Swing) generate, some begin to associate Java with those libraries and rightfully believe that the world would be better off without them. But Java is used for much more than that. A lot of the more recent scripting languages are now written in Java or have popular ports to Java. As an example, some large portal applications use a variant of PHP ported to Java. And of course, there is Android. If you remember Oracle is suing Google right now for Android's use of Java so Oracle is quite aware of its importance for the future.

I remember back when I was a graduate student reading about an alternate real number line where there existed a new number called "delta".

It was defined as being smaller than any positive real number and bigger than zero. Of course, this was not our normal real numbers that come from closing the rational numbers (using classes of Cauchy sequences) under the standard metric.

In these real numbers, 1/3 and .333... were not the same number, but were considered sufficiently close to be presented as the same answer to real world problems.

The advantage of this real number system is that it did interesting things to Calculus. All the complicated Epsilon & Delta limit theorems were trivialized and a lot of operations became simple algebraic manipulations. Also, things like integrals being the reverse of derivatives had interesting simplified proofs.

I also remember an argument being made that one could argue that this approach is not so far from reality. The reality is that in most cases we don't need more than 10 to 20 digits of precision. If we treated 10 to negative 80 as being this "delta" or essentially the same thing as zero (but not zero for calculus), you will find that mathematics does not fall apart as quickly as you might think and can still be essentially manipulated to give you most of the theorems and proofs of results critical to real world manipulations (including such things as General Relativity). And in fact, a lot of proofs become easier. This is not such a surprise to Physicists because they have been short cutting some of these types of proofs from the very beginning (starting we Newton who really did not quite grasp limits).

I agree with the above comment, though I do not think the differences are so severe. But I did want to go into the particulars of why Oracle has the best database product out there. This is from somebody who has developed a product that can run on most databases and has been deployed at 1000s of customers, some of whom have scaled up to billions of records. Here is my itemized list in order of importance (at least for the product I worked on).

1. Oracle has true row level transaction isolation. You start a transaction and you do not interfere with anybody who may be reading the rows you are updating. You also do not interfere with the updates to rows that are stored in the same "page". Databases that do not do this properly get two problems. The first is dirty reads where other transactions read rows that are temporarily in an inconsistent state with other rows (add a number to one row, subtract it from another, the other transaction sees the add but not the subtract). But the real problem is transaction deadlocks where each transaction is locking each other because they locked rows they were not supposed to. If you write code that is constantly "transactionally" grooming statistical data about the relative ranking of some row versus others, you will find it impossible to avoid these deadlocks. Only Oracle gives you true full row level (not "page level" as in SQL Server) transaction isolation. Developers in my group have written test programs specifically to prove this.

2. Oracle has sophisticated diagnostic tools that can help diagnose things such as: Why is this query running slowly? Is this data possibly corrupted? Where are my indexes stored and how well are they working? You have a lot of control over these things and that can really help scale a system from a million records to a billion records in a reliable way.

3. Ways to take advantage of multiple disks and fast independent IO to each disk. You can write your transaction log to one disk, partition data based on a particular column's value to various disks (for example if a column indicates "branch" of a company, each branch can have its own disk to store its data), write indexes to yet another disk. When you read or write, the database will read and write from these disks concurrently (really powerful on multi CPU/Core boxes). If the database determines that the query is targeting only a particular partition (for example, the query targets a particular "branch"), then it may figure out that it does not have to read data from the other disks at all. So if two such queries come in targeting different partitions, they will be doing IO to independent disks with independent hardware IO streams. I have had systems that were non functional for a customer become quite useful after applying clever tricks of this type (especially the partitioning when you have more than 20 partitions).

You may argue that most applications that are out there do not need these things. This is true, but nobody is going to make money from selling products to deployers of those applications -- they can usually get by on the free stuff (or close to free). If you need something from a database for which you are willing to pay real money, then Oracle still has some unmatched features.

Now change the problem slightly so that you stop only if a card from deck 1 is a spade. Note how the answer changes. This is at the heart of the debate about problems like these.

Here is a less ambiguous problem that shows the same effects.

Take two decks of cards. Shuffle each deck. Deal a card from deck 1 and another card from deck 2. If one of the cards is a spade, stop. If no card is a space, put the cards back into their original decks, shuffle again and repeat. Continue repeating until one of the cards dealt is a space.

Question: At the time you stop, what is the probability that the other card is black?

You do know the general brevity and slandering nature of your comment reduces its validity.

Could you identify the "giants" for me? My general claim is that Apple is winning because they have a superior technology (not because of marketing). I also believed that was true about Windows 95/Windows NT/Microsoft Office (against the competitors available at that time). Do you disagree and why? I also believe that there are fundamental architectural decisions at the foundations of products that greatly influence their success or failure. Successful (note -- I did not say "good", as a programmer I find some choices made by Microsoft and Apple morally objectionable) software needs well designed foundations. Do you disagree with that? Or do agree with my general assertions but think I have picked lesser arguments to support my statements? What would be stronger arguments?

There is a theme to some of the comments which I wish to rebut. Essentially the theme is that Apple products really are not that good and they sell well only because Apple does such good marketing. The implied assumption here is that if you buy Apple's products, such as the iPod, you are just a sucker fooled by Apple's marketing campaign. Since I have bought Apple products because I thought they were the best products available for my needs, I see these statements as declaring that I am also a sucker and lacking in any real tech smarts. Essentially I feel like I am being called an idiot.

I remember when this debate was between Linux and PCs, and the Linux crowd was trying to argue that nobody should need to run Microsoft software to do their jobs or get things done. This was at time when you could not get Linux to legally read a DVD or use algorithms to do reasonable font rendering. Of course, these limitations were because of licensing issues, some of the most useful software productivity features were protected by commercial licenses or patents. The Linux advocates would argue that I should not be running such software in the first place because it was not "open" software. But that is a different argument. I have far more sympathy for the argument that running Linux is a superior moral choice. But arguing that Linux was a better OS for getting my job done was nonsense.

I am going to come at my argument in a backwards way. Instead of touting features of the iPad, I am going to describe artfully chosen limitations. The biggest limitation is that a developer cannot develop an application that can run as a persistent multi-threaded process. Any application that is not being used at any current moment is torn down and a new one instantiated. This is even more limited than the old Windows 3.x OS with its event driven model for task switching (for those you who don't remember -- Windows 3.x had only one running thread and all applications shared memory). Another limitation is that applications cannot use a shared file system or use shared libraries. You cannot build an application out of other applications or write applications whose purpose is to interact with other applications in useful ways. A user cannot even freely write code for their own application, build it, and run it.

For anybody who likes to tinker with their computers (I consider myself somewhat in that breed, I do programming for a living), this seems almost mind boggling stupid. But there is a method to this madness.

So what do you get back for these choices.

1. A very stable device that does not need to worry about applications doing semi-permanent bad things to your computer requiring a reboot. It is not stable just because applications have a hard time doing bad things, but the basic logic of behavior is so simple that you can "audit" and control it in a way that you cannot control a standard modern OS. This eliminates tangled logic scenarios that come up when you have interactions between device drivers, OS interrupts, glitches in hardware, and complicated applications. Also, it is far easier to write protections against hostile software, especially if you control the distribution of all software for your device.

I think many in the Slashdot crowd underestimate the importance of stability in a portable device. I reboot computers all the time because of glitches of various sorts. It is true that the OS is rarely to blame, it might be the device driver for my mouse, or a disk glitch, a misbehaving network router, or a bad application but generally such issues are fatal. And because of the complexity of the OS, the OS really has no chance at diagnosing the true cause of the problem.

That is not something I will tolerate in a lightweight portable device used for limited but useful activities. I have heard rumors that Android phones, once you start trying to run some of the same application that make the iPhone popular, have far more problems with various issues, such as unwanted battery run down for processes that do not properly terminate, or misbehavior from rogue or badly written applications. Now, I know some that love their Android based phones because they can program them the way you can program for any OS, but that is of no utility for those using those devices in boring (from a "techie" sense) but highly productive useful ways.

2. You are forced to push the real labor for GUI, multimedia, application deployment, event handling, and so on into the OS. You cannot insist that the application fulfill these functions because the applications are so tightly locked inside their software jail. This forces uniformity and consistency of behavior from all applications written for the device. There is a predictability in what the applications are unable to do. On a real OS, it is quite possible for end users to feel that they have no real clue what the software they are running is really doing or what the consequence might be if they ran the software in unusual configurations or settings. Of course, you also cannot have positive pleasant surprises as well. But for smallish devices that are used constantly for limited but important activities, that is a small sacrifice to pay for consistency of usage patterns.

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So though this may sound counter-intuitive, I feel the real genius of the iPhone, iPod, and iPad is in what they cannot do and not in what they can do. Of course, there are some things Apple's software can do that nobody has matched. For example, only Apple has found a way of accurately guessing your intent when you press your over-sized thumb on a crowded display of small little letters. This may sound small, but in someways it is everything. It places the iPhone (and brethren) into an elite status clearly differentiated from the rest.