Orthodox economics assumes that people know roughly what they are doing, that they are rational, and that rationality is unambiguous. But in financial markets, people often don’t know what they are doing. Recognising this helps to solve our puzzles.
Many hedge fund managers, for all their fancy jargon and maths PhDs, do what Nassim Nicholas Taleb accused them of in his book The Black Swan: they are just picking up pennies in front of a steamroller. And sometimes the steamroller accelerates.
Technology has always been about hope. As the pace of technological innovation has intensified over the past two decades, businesses have come to expect that the next new thing will inevitably bring them larger market opportunities and bigger profits. Software, a technology so invisible and obscure to most of us that it appears to work like magic, especially lends itself to this kind of open-ended hope.
... Management became accustomed to the idea that buying more computers and more software would continue to cut costs and improve operations. But there are limits, some of which are inherent in the nature of software itself.
The proposed fix for these problems — the next new thing — is service-oriented architecture.
The Lego dream has been a persistent favorite among a generation or more of programmers who grew up with those construction toys. Unfortunately, however, software does not work as Legos do.
The same people who've been saying for weeks that all was well are now the loudest in urging the Fed to reflate the bubble. These pleaders ignore two major risks.
The first is the "moral hazard" problem of rescuing Wall Street banks and hedge fund players that walked too far on the wild side during the boom. They made money then, and they need to absorb the losses now. Without enduring the discipline of losses, the offenders will go even further out on the risk curve next time.
The second problem is that a Fed reflation could lead to even more trouble if it causes a loss of confidence in the dollar.
This is the (extraordinarily obvious) point the Wall Street Journal missed when it chimed in yesterday in support of the Senator. As the Journal wrote:
Her answer was met with jeers, but what Mrs. Clinton was daring to tell her left-wing audience is that lobbyists are an essential means by which average Americans transmit their political concerns to Washington, and in turn hold their elected Representatives accountable. Not everyone in America can afford to trek to D.C., or has the clout to demand an audience with a Senator. Lobbyists represent the collective voice of groups with shared ideals, whether they be gun owners, union workers, corporate employees or the pro-choice movement.
Just the sort of reasoning that makes that page so famous: Look, lawyers represent their clients before a judge. Does it follow from that that judges must be free to take money from lawyers? Even just to redecorate their office?
VMware's IPO - Insanity turns Silicon Valley back to normal | The Register
Topic: Business
11:06 am EDT, Aug 15, 2007
VMware - trading on the NYSE under VMW - looks to ship 33m shares at $29 each. That leaves the sever virtualization maker hoping to bring in $957m. Most indications have the company blowing past that figure and igniting a Silicon Valley boom.
I can't seem to find this on any of the finance sites, but this would be a good one to own.
BBC NEWS | Science/Nature | Stargazers set sights on meteors
Topic: Science
12:25 pm EDT, Aug 11, 2007
Shooting stars are set to grace the night sky with a spectacular light display this weekend.
The annual Perseid meteor shower will reach its peak during the early hours of Monday, but it will be visible from Saturday night until Tuesday morning.
well it's gone 2am Sat morning and i've just come in from the garden having spent some time drinking tea (decaff), listening to Joanna Newsom and then some Bach, and watching out for the first few meteors and i did see a couple and i'm hoping for more meteors and beautiful clear skies during the next few nights
Groklaw - Court Rules: Novell owns the UNIX and UnixWare copyrights! Novell has right to waive!
Topic: Miscellaneous
12:18 pm EDT, Aug 11, 2007
Hot off the presses: Judge Dale Kimball has issued a 102-page ruling [PDF] on the numerous summary judgment motions in SCO v. Novell. Here is what matters most:
[T]he court concludes that Novell is the owner of the UNIX and UnixWare Copyrights.
That's Aaaaall, Folks! The court also ruled that "SCO is obligated to recognize Novell's waiver of SCO's claims against IBM and Sequent". That's the ball game. There are a couple of loose ends, but the big picture is, SCO lost. Oh, and it owes Novell a lot of money from the Microsoft and Sun licenses.
