Credit Crunch: New from Kelloggs.

[glenatron]

I don't understand the whole "markets" thing, or why "the markets" should be allowed to decide things. To me that seems like leaving really important decisions to a roulette wheel or the patterns formed when you scatter billiard balls around the table and then start knocking them into each other as hard as you can

Comments

[life_of_tom]

I think that presumed growth thing is one of the great fallacies of our time, actually. A while back in a feedback/brainstorming/give the staff little bits of card to write suggestions on so it makes them feel involved in management decisions session that my MegaGloboFinanceCorp employers (who I might refer to accurately as Caledonian Bereaved Ladies) put me through, my boss mentioned that they assume 10% growth in terms of business each year as part of their investment model. The idea that you'd be able to increase your market share by that much, or that people would become more assiduous savers towards retirement, EACH YEAR, is frankly ludicrous.

I didn't know that about the programming patterns. That's hella crazy. That's like letting Skynet be in charge of the world's financial markets.

[life_of_tom]

Oh, and another thing, if I was an islamic terrorist, I wouldn't be thinking about hijacking planes and flying them into whatever the new equivalent of the World Trade Centre is any more, I'd be telling my impressionable young men to go learn how to program. That's ridiculously risky.

[glenatron]

Of course, with the islamic rules on usury being what they are, the islamists are having a field day right now.

[glenatron]

Where does all this growth come from? How can demand always rise? It doesn't make sense.

The conclusion I'm leaning towards is that economics isn't a science so much as a religion.

[ciderclaus]

The automated trading systems are designed to be really clever, though as you've pointed out they have a massive flaw in them. Essentially if you have ten decision makers, number one thinks stock x will rise, stock y will fall and stock z will remain staionary. No one else will work this out stock I'm going to buy, sell and hold acordingly. The other nine work things out exactly the same and come to the same conclusions. The entire market then moves in the same way, meaning every thing moves left when it should move right.

[glenatron]

In a stable market they seem to work out fine, but when things get a little choppy I'm not sure how great they are as autopilots...

[glenatron]

Very good point.

[z111]

sounds right to me