Normal Reaction

One day when the teacher walked to the black board, she noticed someone handwritten the word 'penis' in tiny small letters. She turned around, scanned the class looking for the guilty face. Finding none, she quickly erased it, and began her class.

The next day she went into the room, and she saw, in larger letters, the word 'penis' again on the black board. Again, she looked around in vain for the culprit, but found none, so she proceeded with the day's lesson.

Every morning, for about a week, she went into the classroom and found the same word written on the board, each day's word larger than the previous day's word. Finally, one day, she walked in, expecting to be greeted by the same word on the board, but instead, found the words,

"The more you rub it, the bigger it gets!"

The Subprime Situation Report II

As I mentioned earlier, the coming reset of outstanding mortgages will definitely put tremendous pressure on the overall US economy and the financial markets all around the world. Justification for this madness was the dispersal of risk. What do I mean by that?

As you will have probably read elsewhere, these loans were sliced and diced and repackaged and sold as mortgage-backed bonds. They were rated by Moody’s and Standard & Poor’s, often as high as AAA. These CDOs, as they are called, were then sold to investors such as hedge funds. These toxic investments are now spread throughout the world causing immeasurable contamination. But that's not all. What has made the whole situation so much worse is the excessive leverage!

Leverages are everywhere. To give an example of this, the Goldman Sachs funds that have been in great difficulty were leveraged by a factor of eight to ten times and therein lies the rub. Goldman Sachs, who deny bailing the fund out, have nonetheless injected $2 billion of their own money and persuaded outsiders to contribute a further billion, in so doing, have reduced the gearing to 3.5 times – still very rich!

What astounds us is that so many of the participants have been surprised at what has happened. They have the brightest brains and the most modern of computer systems. These computer systems were mentioned in a recent article in the Financial Times by GillianTett and Anuj Gangahar; they said that Goldman Sachs, renowned as one of the savviest players on Wall Street, had to admit that their flagship global equity fund lost over 30% of its value in just one week because of problems with its trading strategies created by computer models. In particular, the computers had failed to foresee recent market movements to such a degree that they labelled them a “25 – standard deviation event”; something that only happens once every 100,000 years or more, yet very recently several occurred on consecutive days!

The conclusion one must draw is that in some fashion or another this extraordinarily, but predictable, chain of events that could only end in disaster are like alchemy, transformed when fed into complicated mathematical equations and crunched by computers to a one in 100,000 years or more probability of collapse. The fact that these computer programs have control over such huge amounts of money should send shivers through the system and bring a smile to Nassim Taleb’s face. Who is he?

Nassim Taleb makes a living out of betting on such rare events. He is famous for his books “Fooled by Randomness” and subsequently “The Black Swan”. He uses the symbolic “black swan” as an example of a rare event and explains that just because you haven’t seen a black swan doesn’t mean that one does not exist, as indeed they do!

So, don't say I never say okay. Prepare to meet Ms Black Swan...soon.

黑色幽默 - 周杰伦

歌曲：黑色幽默
歌手：周杰伦
专辑：the one

难过是因为闷了很久
是因为想了太多
是心理起了作用
你说苦笑常常陪着你
在一起有点勉强
该不该现在休了我
不想太多
我想一定是我
听错弄错搞错拜托
我想是你的脑袋有问题
随便说说
其实我早已经
猜透看透不想多说
只是我怕眼泪撑不住

不懂你的黑色幽默
想通却又再考倒我
说散你想很久了吧
我不想拆穿你
当作是你开的玩笑
想通却又再考倒我
说散你想很久了吧
败给你的黑色幽默

我的认真败给
黑色幽默