A list of Apple fanboy blogs

http://daringfireball.net/ – John Grubber

http://techcrunch.com/author/mg-siegler/ – MG Siegler
http://parislemon.com/ – MG Siegler

http://www.splatf.com/ – Dan Frommer

Glass-Steagall, for example, was a great piece of legislation that protected us from the worst excesses of banking. But it took a Depression to deliver it.

I do not understand it all yet, but a longer list of assumptions made on the investment vehicles:

1. Housing prices rarely go down, at least nationally.
2. Default losses on large mortgage pools are not only low but relatively stable.
3. People don’t walk away from their homes, even when they’re under water.
4. Regional housing markets are largely uncorrelated.

This was one of the hard hitting lines from the article:

Thanks to the embedded leverage these “legacy” assets contain, a 20% (housing) price decline has resulted in 80% or 90% or even 100% losses on many of them.

Should read the article better when I get the time …

• Viability of Pacifism: “those who ‘abjure’ violence can only do so because others are committing violence on their behalf“. However, this is because I think humans have continuously been inflicting violence against each other since history has been recorded. Is this instinct of inflicting violence a basic part of human nature? The reasoning (Religion, Honour, Just, Good vs. Evil, etc.) provided for these actions are hypocritical to be considered seriously (Orwell calls this  “Indifference to Reality”). If it can be shown that such instincts is inescapable (through maybe studies of primates, etc. ), then I will have to accept Pacifism is untenable.
• Self-esteem vs. Nationalism: How can we strike a balance between the amount of history of the home country can be taught so that a child feels important but yet does not end up as a nationalist? Should we just have “I am unique but still Not-Special” sessions? I feel this is important in more ways than is obvious. If a child is taught to compare between cultures and see that there is nothing “special” about one’s own background, maybe hero worship will also decrease. This will lead people to see what qualities made success out of people and they can then try and emulate it.

“HaHaHaHaHaHa”.

Bloomberg Manages to circumvent Term Limit – This is a bad idea. His intentions (staying in public view till the next presidential elections) and his previous good record don’t matter.

The last six months have made it abundantly clear that voluntary regulation does not work.

Greenspan has argued that regulation is best done by counterparties and banks; not by the government:

I do believe bank risk managers and loan officers are more knowledgeable than government bank regulators. Bank loan officers, in my experience, know far more about the risks and workings of their counterparties than do the bank regulators that examine those counterparties.

He even punts at the end:

We have tried regulation ranging from heavy to central planning. None meaningfully worked. Do we wish to retest the evidence?

Greenspan implies these boom-bust cycles are inevitable in capitalism. However, forgoing regulation completely (on hindsight ) seems to be like forgoing crime prevention efforts because we cannot have perfect crime prevention.

• The models looked at years of history instead of a few previous months. This makes no sense to me: “There is no data like more data” and all that.
• The products were so complex that no one knew how to assign risk to them.

The article concludes that the blame also falls on the experienced non-quants in these investement banks for improper supervision.

• Models are not built on complete evidence; they do not know how to model unseen events.
• Events become more correlated during stressful times.
  • LTCM assumed independent spreads which become correlated after the Russia default.
  • The present crisis resulted from a bad assumption that the housing markets among states (e.g., CA and FL) are independent. So the odds of subprime defaults in both states were assumed to be exponentially lower than in either of them.
    
  • (But these new investment vehicles (subprime, Alt-A, etc.) themselves were inherently bad products. I do not know what kind of default processes were assumed.)
• However, modelers are not alone to blame. Regulators knew what can happen with unregulated growth after LTCM. However, follow-up was not done. Greenspan was strongly convinced (and still is ) that investment banks are the best self-regulators. (He has also mentioned in some FT.com articles that he himself does not know what is the best method of regulation).
• “The United States had never suffered a nationwide contraction in housing prices” – is this true??