Wednesday, May 19, 2010

Change is about changing behaviors

Rosabeth Moss Kanter rightly says " culture is the hardest thing to change, whether ethics in the financial system or the eating habits of individuals. That's because change is not a decision like appointing a new CEO, nor is it an event like winning an election. Change is an ongoing campaign." She argued for five elements than can bring change but the last one is relevant to our subject i-e bringing a change in behaviors.


It is " like marketing campaigns that require point of sale support, successful behavior change campaigns need to place reminders at the point of action - the moment of truth when behavior is set in motion." This constant reminder theory is also mentioned by Richard H. Thaler and Cass R. Sunstein


The Wall Street Journal reports on another study showing that reminding (some call it nagging) has its virtues - this time for exercising. As part of the study, one group of people received a weekly phone call from a human asking them how much exercise they'd gotten that week and congratulating them if they had met a personal goal. Another group got a similar call from an automated system. A third group got no call.



After 12 months, participants receiving calls from a live person were exercising, as a mean, about 178 minutes a week, above government recommendations for 150 minutes a week. That represented a 78% jump from about 100 minutes a week at the start of the study. Exercise levels for the group receiving computerized calls doubled to 157 minutes a week. A control group of participants, who received no phone calls, exercised 118 minutes a week, up 28% from the study's start. "When you knew you were going to have to report back on what you had done, it motivated you," says Ms. Lowe.


Monday, May 17, 2010

There is only one solution to current debt based financial crisis

"In an interview with CNN's Fareed Zakaria to be aired today, G-Pap has threatened he may sue US banks for "contributing" to his country's debt crisis. For those of you lacking in analogy skills, Greece is in the same shoes as a bankrupt debtor who wants to sue his creditors for daring to hike up his interest rate when the only means he has to roll his debt is by using another credit card (this one issued by US and European Taxpayers), even as bankruptcy is literally hours away."


"Allah will deprive usury of all blessing but will give increase for deeds of charity: for He loveth not creatures ungrateful and wicked." Aya 276 of Sura Al-Baqara


"O ye who believe! fear Allah and give up what remains of your demand for usury if ye are indeed believers. If ye do it not take notice of war from Allah and his Apostle: but if ye turn back ye shall have your capital sums; deal not unjustly and ye shall not be dealt with unjustly. f the debtor is in a difficulty grant him time till it is easy for him to repay. But if ye remit if by way of charity that is best for you if ye only knew." Ayat 278 - 280 of Sura Al-Baqara



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Thursday, May 13, 2010

The Great American Bubble Machine - Goldman Sachs

Here is an excerpt from an article by Matt Taibbi

The First thing you need to know about Goldman Sachs is that it's every-
where. The world's most powerful investment bank is a great vampire squid
wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who'sWho of Goldman Sachs graduates.


By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect ofthe bailout, a suspiciously self serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup - which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former GoIdman banker, Thain enjoyed a multibillion dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia,
scored himself and his fellow executives $225 million in golden parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, wbich forked over $13 billion to Goldman after Liddy
came on board. The heads ofthe Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of NewYork - which, incidentally, is now in charge of overseeing Goldman - not to mention ...


But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain - an extremely unfortunate loophole in the system of
Western democratic capitalism, which never foresaw that in a Society governed passively by free markets and free elections,organized greed always defeats disorganized democracy.

The bank's unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere - high gas prices, rising consumer credit rates, half eaten pension funds, mass layoffs, future taxes to payoff bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense. Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth - pure profit for rich individuals.


They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s - and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.


If you want to understand how we got into this financial crisis, you have to first understand where all the money went - and in order to understand that, you need to understand what Goldman has already gotten away with. It is a history exactly five bubbles long - including last year's strange and seemingly inexplicable spike in the price of oil. There were a lot of losers in each of those bubbles, and in the bailout that followed. But Goldman wasn't one of them.

Tuesday, April 27, 2010

One way to keep your debt down is to bring a loss frame to your loan statement

Here is a reproduction of a very useful technique to remind oneself to keep the debt figure down. The description is in the context of credit card statement but can be applied to credit facility statement as well.


"Nudge blog reader and Booth School grad Fakhr Mokadem thinks there is a way to reframe credit card statements to keep people from overspending. Instead listing the balance as a positive amount, Mokadem wants to list it as a negative.


For instance, say I have a credit limit of $10,000 and I have spent $8,500 throughout the month. Usually a credit card statement would read: – Credit $8,500. Available balance $1,500. This lets people feel that they have room to spend…
What if I had the following statement: You are -$8,500 and you can go down to -$10,000.
Framing the statement this way makes feel that you should move up to zero, rather than trying to stay below $10,000.
Mokadem says he tries to read his statements this way in order to motivate himself to keep his debt down. “Instead of feeling that I have a right to spend up to my available balance, I feel that I am under water or really in debt,” he says."

Nudge blog · Trying to keep your debt down? Bring a loss frame to your credit card statement

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Saturday, April 24, 2010

Computerized Controlled Free Market

Here is an excerpt from an interesting article about free market



While the SEC is busy investigating Goldman Sachs, it might want to look into another Goldman-dominated fraud: computerized front running using high-frequency trading programs.

Market commentators are fond of talking about “free market capitalism,” but according to Wall Street commentator Max Keiser, it is no more. It has morphed into what his TV co-host Stacy Herbert calls “rigged market capitalism”: all markets today are subject to manipulation for private gain.

Keiser isn’t just speculating about this. He claims to have invented one of the most widely used programs for doing the rigging. Not that that’s what he meant to invent. His patented program was designed to take the manipulation out of markets. It would do this by matching buyers with sellers automatically, eliminating “front running” – brokers buying or selling ahead of large orders coming in from their clients. The computer program was intended to remove the conflict of interest that exists when brokers who match buyers with sellers are also selling from their own accounts. But the program fell into the wrong hands and became the prototype for automated trading programs that actually facilitate front running.

Also called High Frequency Trading (HFT) or “black box trading,” automated program trading uses high-speed computers governed by complex algorithms (instructions to the computer) to analyze data and transact orders in massive quantities at very high speeds. Like the poker player peeking in a mirror to see his opponent’s cards, HFT allows the program trader to peek at major incoming orders and jump in front of them to skim profits off the top. And these large institutional orders are our money -- our pension funds, mutual funds, and 401Ks.

When “market making” (matching buyers with sellers) was done strictly by human brokers on the floor of the stock exchange, manipulations and front running were considered an acceptable (if morally dubious) price to pay for continuously “liquid” markets. But front running by computer, using complex trading programs, is an entirely different species of fraud. A minor flaw in the system has morphed into a monster. Keiser maintains that computerized front running with HFT has become the principal business of Wall Street and the primary force driving most of the volume on exchanges, contributing not only to a large portion of trading profits but to the manipulation of markets for economic and political ends.


Web of Debt - COMPUTERIZED FRONT RUNNING: HOW A COMPUTER PROGRAM DESIGNED TO SAVE THE FREE MARKET TURNED INTO A MONSTER

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Wednesday, April 21, 2010

Can we reduce Natural Disasters After Effects?

A quote from HBR Blog "The Conversation" on the need for a strategy to reduce aftereffects of natural disasters to "man-reduced".


"The biggest lesson that we can learn from natural disasters is that while they are not man-made, their aftereffects can be "man-reduced." It might be easy to regard the European airspace crisis as a one-off, but as many regions worry about the "next big one," more specific measures should be put in place by governments as well as by businesses for coping with big natural disasters when they do strike. We don't know whether it will be an earthquake, a tsunami, or a volcano next time — but we do know there will be a next time."


But the question is, can we reduce the aftereffects of natural disasters.


For the Believers', there is guidance in Quran as to how to cope with natural calamity.


"O ye who believe! seek help with patient perseverance and prayer: for Allah is with those who patiently persevere. And say not of those who are slain in the way of Allah: "They are dead." Nay they are living though ye perceive (it) not. Be sure We shall test you with something of fear and hunger some loss in goods or lives or the fruits (of your toil) but give glad tidings to those who patiently persevere. Who say when afflicted with calamity: "To Allah we belong and to Him is our return." They are those on whom (descend) blessings from Allah and Mercy and they are the ones that receive guidance." Ayat 153 - 157 of Sura Al-Baqara







Rising From the Ash: The Need for Risk Strategy - The Conversation - Harvard Business Review

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Monday, April 19, 2010

Geneva atom smasher sets collision record - Yahoo! News


" The world's largest atom smasher conducted its first experiments at conditions nearing those after the Big Bang, breaking its own record for high-energy collisions with proton beams crashing into each other Tuesday at three times more force than ever before.


In a milestone for the $10 billion Large Hadron Collider's ambitious bid to reveal details about theoretical particles and microforces, scientists at the European Organization for Nuclear Research, or CERN, took high-tech photographs so they could study the disintegrating protons after they collided at a combined energy level of 7 trillion electron volts.
The collisions herald a new era for researchers working on the machine in a 17-mile (27-kilometer) tunnel below the Swiss-French border at Geneva.
Dubbed the world's largest scientific experiment, researchers hope the machine can approach on a tiny scale what happened in the first split seconds after the Big Bang, which they theorize was the creation of the universe some 14 billion years ago.
In its standard form, the big bang theory assumes that all parts of the universe began expanding simultaneously. But how could all the different parts of the universe synchronize the beginning of their expansion? Who gave the command? 
Andre Linde, Professor of Cosmology 1
"He is the Creator of the Heavens and the Earth..." (Surat ash-Shura, 11)
In the only book revealed by Allah that has survived completely intact, the Qur'an, there are statements about the creation of the universe from nothing as well as how this came about that are parallel to 20th-century knowledge and yet were revealed fourteen centuries ago. 
First of all, the creation of this universe from nothingness is revealed in the Qur'an as follows:
He(Allah) is the Originator of the heavens and the earth…(Surat al-Anam: 101)
Another important aspect revealed in the Qur'an fourteen centuries before the modern discovery of the Big Bang and findings related to it is that when it was created, the universe occupied a very tiny volume:
Do those who are disbelievers not see that the heavens and the earth were sewn together and then We unstitched them and that We made from water every living  thing? So will they not have faith? (Surat al-Anbiya': 30) 
There is a very important choice of words in the original Arabic whose translation is given above. The word ratktranslated as "sewn to" means "mixed in each, blended" in Arabic dictionaries. It is used to refer to two different substances that make up a whole. The phrase "we unstitched" is the verb fatk in Arabic and implies that something comes into being by tearing apart or destroying the structure of ratk. The sprouting of a seed from the soil is one of the actions to which this verb is applied.
Let us take a look at the verse again with this knowledge in mind. In the verse, sky and earth are at first subject to the status of ratk. They are separated (fatk) with one coming out of the other. Intriguingly, cosmologists speak of a "cosmic egg" that consisted of all the matter in the universe prior to the Big Bang. In other words, all the heavens and earth were included in this egg in a condition of ratk. This cosmic egg exploded violently causing its matter to fatk and in the process created the structure of the whole universe.
Another truth revealed in the Qur'an is the expansion of the universe that was discovered in the late 1920s. Hubble's discovery of the red shift in the spectrum of starlight is revealed in the Qur'an as :
It is We Who have built the universe with (Our creative) power, and, verily, it is We Who are steadily expanding it. (Surat adh-Dhariyat: 47)
In short, the findings of modern science support the truth that is revealed in the Qur'an and not materialist dogma. Materialists may claim this all to be "coincidence" but the plain fact is that the universe came into being as a result of an act of creation on the part of Allah and the only true knowledge about the origin of universe is to be found in the word of Allah as revealed.


Geneva atom smasher sets collision record - Yahoo! News

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