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Garbage in, garbage out trampled by Moore's law
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Garbage in, garbage out trampled by Moore's law
On Tue, 16 Dec 2008 18:40:20 -0800, Robert Myers wrote:
Told you so. http://arstechnica.com/news.ars/post...wnturns-and-a- global-computer-crash.html So, you think that the re-regulation of the financial system will involve mandatory error bounds on stock value predictions? ;-) Cheers, -- Andrew |
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Garbage in, garbage out trampled by Moore's law
On Dec 16, 9:50*pm, Andrew Reilly -
users.org wrote: On Tue, 16 Dec 2008 18:40:20 -0800, Robert Myers wrote: Told you so. http://arstechnica.com/news.ars/post...wnturns-and-a- global-computer-crash.html So, you think that the re-regulation of the financial system will involve mandatory error bounds on stock value predictions? *;-) The point is that such error bounds aren't possible, even in theory. Everyone's assumptions about how many sigma out their model breaks depends on everyone else's assumptions. The question is whether very large computers really can be used for all but the most trivial and transparent of tasks: animation, say, or physics modeling, or gene sequencing. Tasks that are computationally intensive but fundamentally simple and repetitive. The Monte Carlo simulations of financial engineers look(ed) like an ideal candidate. The jury may still be out, but for a long time I've been leaning toward, "No, they can't be." Robert. |
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Garbage in, garbage out trampled by Moore's law
Andrew Reilly wrote:
On Tue, 16 Dec 2008 18:40:20 -0800, Robert Myers wrote: Told you so. http://arstechnica.com/news.ars/post...wnturns-and-a- global-computer-crash.html So, you think that the re-regulation of the financial system will involve mandatory error bounds on stock value predictions? ;-) I don't know how these models look like, but a model that allows even to input an "infinite, indefinite, perpetual growth" of some number is already broken at the model level. This model must be a non-physical model, i.e. one which does not represent reality, and does not care about boundary conditions which reality always has. Models like that are common, even spice models in digital circuit simulation work like that. You can look at a diode model - it has an exponential current curve over voltage (plus some resistance and capacitance, and the current curve is asymmetric with a much higher threshold in reverse direction). In reality, there's a boundary: The current heats the diode, and eventually, it melts down, changing everything (after meltdown, there's no P/N transition anymore, and therefore no diode, just a resistor). There simply is no unlimited exponential growth. Furthermore, in reality, noise plays an important role. Electric noise in a diode just as well as random changes in supply and demand of real goods (like houses). If your model comes without noise, it can only simulate stable conditions, where noise will just return to the original state. You then must find out the phase margin of your simulation, and predict a noise magnitude, to see if your system really is stable. -- Bernd Paysan "If you want it done right, you have to do it yourself" http://www.jwdt.com/~paysan/ |
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Garbage in, garbage out trampled by Moore's law
On Tue, 16 Dec 2008 19:49:21 -0800, Robert Myers wrote:
On Dec 16, 9:50Â*pm, Andrew Reilly - users.org wrote: On Tue, 16 Dec 2008 18:40:20 -0800, Robert Myers wrote: Told you so. http://arstechnica.com/news.ars/post...wnturns-and-a- global-computer-crash.html So, you think that the re-regulation of the financial system will involve mandatory error bounds on stock value predictions? Â*;-) The point is that such error bounds aren't possible, even in theory. Hence the winky-smiley. Still, I wonder whether there's any correlation between present financial difficulty and wildness of the "financial" models being relied-upon, among the denizens of Wall St? Everyone's assumptions about how many sigma out their model breaks depends on everyone else's assumptions. The question is whether very large computers really can be used for all but the most trivial and transparent of tasks: animation, say, or physics modeling, or gene sequencing. Tasks that are computationally intensive but fundamentally simple and repetitive. The Monte Carlo simulations of financial engineers look(ed) like an ideal candidate. Luckily there's plenty of interesting problems that fit into those categories (trivial and transparent) to keep the computers busy. Of course, there's also a bunch of interesting computation that uses integer and other exact arithmetics that have no trouble being as elaborate as you please. Not usually on such a scale, I suppose (databases and communication and web and so on). The jury may still be out, but for a long time I've been leaning toward, "No, they can't be." That may be so, but (a) can it be legislated that way and (b) if not, wouldn't you still put your retirement money with the guy who's models/ predictions/gut-hunches are working out the best? When it's the only game in town... Cheers, -- Andrew |
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Garbage in, garbage out trampled by Moore's law
Andrew Reilly writes: So, you think that the re-regulation of the financial system will involve mandatory error bounds on stock value predictions? ;-) http://www.garlic.com/~lynn/2008s.html#23 Garbage in, garbage out trampled by Moore's law GAO has been doing database of increasing numbers of financial restatements of public companies (in spite of SOX). Basically executives fiddle statements in order to increase bonuses. Later statements may be restated, but executives don't forfeit bonuses. One of the worst examples was freddie was fined $400m in 2004 for $10b statement fiddling/inflation and the CEO replaced ... but allowed to keep tens (hundred?) of millions. an earlier GAO reference: http://www.gao.gov/cgi-bin/getrpt?GAO-03-138 2006 GAO reference: http://www.gao.gov/new.items/d06678.pdf post from earlier this year (with several additional references) http://www.garlic.com/~lynn/2008f.html#96 with respect to rating agencies giving triple-A ratings to toxic CDOs, supposedly SOX required SEC to do something with respect to the rating agencies ... but there doesn't seem to have been anything besides a Jan2003 report. Report on the Role and Function of Credit Rating Agencies in the Operation of the Securities Markets; As Required by Section 702(b) of the Sarbanes-Oxley Act of 2002 http://www.sec.gov/news/studies/cred...report0103.pdf another reference: http://www.garlic.com/~lynn/2008s.html#5 and some related items: http://www.garlic.com/~lynn/2008s.html#9 I would claim that regulation of the financial infrastructure and insider anti-fraud processes are closely related. this recent post mentions an early 80s court case involving (silicon valley, computer) industrial espionage ... and the court effectively required demonstrating that anti-theft/anti-fraud processes (which were proportional to the value of the information, in the particular situation, a couple billion dollars) had to be in place http://www.garlic.com/~lynn/2008s.html#5 Greed - If greed was the cause of the global meltdown then why does the biz community appoint those who so easily succumb to its temptations? in the above post, i mentioned that in a 2004 european financial executive conference, i claimed that SOX was in large part window dressing. the analogy (in the industrial espionage court case) was akin to requiring fences around swimming pools since minors can't be held responsible for going swimming. given sufficient temptation ... the court basically assumed everybody would steal something valuable .... unless there were countermeasures. Asking why financial regulation is needed is possibly on par with wondering why banks might use vaults to keep money. The court (in the particular case from the early 80s claiming billions in damages) .... bascially wanted, in additon to showing that the information had been stolen (and used so that there was resulting damages), proof that there had been anti-theft processes in place (and considered adequate to protect something worth billions of dollars, aka "security proportional to risk"). -- 40+yrs virtualization experience (since Jan68), online at home since Mar70 |
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Garbage in, garbage out trampled by Moore's law
http://www.garlic.com/~lynn/2008s.html#23 Garbage in, garbage out trampled by Moore's law http://www.garlic.com/~lynn/2008s.html#24 Garbage in, garbage out trampled by Moore's law and for more of the view requiring regulation: Corporate Fraud and Misconduct Risks Driven by Pressure to do 'Whatever It Takes'; Fewer episodes reported by companies with ethics and compliance programs http://www.financetech.com/news/show...leID=212501185 from above: Of more than 5,000 U.S. workers polled this summer, 74 percent said they had personally observed misconduct within their organizations during the prior 12 months, unchanged from the level reported by KPMG survey respondents in 2005. Roughly half (46 percent) of respondents reported that what they observed "could cause a significant loss of public trust if discovered," a figure that rises to 60 percent among employees working in the banking and finance industry. .... snip ... -- 40+yrs virtualization experience (since Jan68), online at home since Mar70 |
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Garbage in, garbage out trampled by Moore's law
On Dec 18, 8:56*pm, Anne & Lynn Wheeler wrote:
Of more than 5,000 U.S. workers polled this summer, 74 percent said they had personally observed misconduct within their organizations during the prior 12 months, unchanged from the level reported by KPMG survey respondents in 2005. Roughly half (46 percent) of respondents reported that what they observed "could cause a significant loss of public trust if discovered," a figure that rises to 60 percent among employees working in the banking and finance industry. Perhaps the computers and the PhD's in economics are nothing more than window dressing, or perhaps even worse: a cover for garden-variety fraud. Robert. |
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Garbage in, garbage out trampled by Moore's law
Robert Myers writes: Perhaps the computers and the PhD's in economics are nothing more than window dressing, or perhaps even worse: a cover for garden-variety fraud. http://www.garlic.com/~lynn/2008s.html#23 Garbage in, garbage out trampled by Moore's law http://www.garlic.com/~lynn/2008s.html#24 Garbage in, garbage out trampled by Moore's law http://www.garlic.com/~lynn/2008s.html#27 Garbage in, garbage out trampled by Moore's law there is the old line about asking crooks why they rob banks ... and the answer is: that is where the money is. if overall number is 46% ("could cause a significant loss of public trust if discovered") and number for financial is 60%, then the non-financial industry number should be someplace under 40% ... making financial industry at least 50% worse than other industries. recent/similar thread in some linkedin discussions ... where i commented that SOX (sarbanes-oxley passed in the wake of enron & worldcom) was more like "window dressing" & some amount of the input fiddling was a case of "garbage in, garbage out": http://www.garlic.com/~lynn/2008s.html#9 Blind-sided, again, Why? as implied in the reference to the (silicon valley, computer related) industrial espionage litigation from early 80s, the assumption is that everybody is a crook (given sufficient temptation) and countermeasures are required that are proportional to risk (and/or proportional to temptation). -- 40+yrs virtualization experience (since Jan68), online at home since Mar70 |
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