Comments for ""My Manhattan Project""
Nemo says:
All my software does is let me post first.
I feel like such an underachiever.
Nemo Mon Mar 30 16:14:26 2009 CDT #
Ken says:
Nemo at 3:14:26 (first, of course): You can at least console yourself with the thought that your software is unlikely to destroy the world.
Parent Post
Ken Mon Mar 30 16:22:10 2009 CDT #
Tim waiting for 2012 says:
Dealing with the TOxic fallout.
Tim waiting for 2012 Mon Mar 30 16:14:43 2009 CDT #
Tim waiting for 2012 says:
How much did this net this guy
Tim waiting for 2012 Mon Mar 30 16:16:04 2009 CDT #
nades says:
HT - EHP ! :-D
(or fist pound if you're younger or a HW fan... I think its funny everytime I read it)
nades Mon Mar 30 16:17:12 2009 CDT #
energyecon says:
The bank walkaway story from the link posted by JP on the last thread - please read it and pass it along.
http://www.nytimes.com/2009/03/30/us/30walkaway.html?_r=2&partner=rss&emc=rss
energyecon Mon Mar 30 16:17:35 2009 CDT #
Tupuli says:
Well, you should start accepting bids Nemo.
Tupuli Mon Mar 30 16:18:39 2009 CDT #
MS says:
The lack of an NOD is a bit telling in most of these cases.
Ciao
MS
MS Mon Mar 30 16:23:16 2009 CDT #
FFDIC says:
http://dallas.bizjournals.com/dallas/stories/2009/03/30/daily9.html?ed=2009-03-30&ana=e_du_pub
<h1 class="headline">Kimberly-Clark rolls out new Depends</h1>
<h3>Dallas Business Journal</h3>
FFDIC Mon Mar 30 16:23:38 2009 CDT #
Doc at the Radar Station says:
http://dallas.bizjournals.com/dallas/stories/2009/03/30/daily9.html?ed=2009-03-30&ana=e_du_pub
From the linked article: The campaign includes TV ad spots directed by filmmaker Errol Morris.
I hope Errol Morris comes up with a doozey related to the financial crisis.
Parent Post
Doc at the Radar Station Mon Mar 30 20:47:14 2009 CDT #
Jas says:
--
Thing is that anyone with money and power can buy the best minds and Crooks of Wall Street never had the problem to buy the best minds from the best schools. Ivey League economists are for sale and so are most professionals. America is full of intellectual whores.
Jas
Jas Mon Mar 30 16:23:42 2009 CDT #
MS says:
sorry post was in response to energy's
Ciao
MS
MS Mon Mar 30 16:24:04 2009 CDT #
Ken says:
"securities that can be accurately priced" ... "Done correctly and conservatively"... "tailor risks to the needs of investors"...
As a programmer, I'm seeing all sorts of unwarranted assumptions in this. I wonder whether any of these were mentioned in the requirements analysis phase of the software design. Come to think of it, I wonder if there was a requirements analysis phase.
Ken Mon Mar 30 16:24:56 2009 CDT #
Sexy Derivative says:
<i>Done correctly and conservatively, it increases the efficiency with which banks can loan money and tailor risks to the needs of investors.</i>
If by 'done correctly and conservatively' you mean not having fraud at every step of the process, this is right.
Sexy Derivative Mon Mar 30 16:25:27 2009 CDT #
EvilHenryPaulson says:
nades, thanks. If I wanted front page H/Ts I just need to e-mail to CR, instead of burying the links in the comments. However your nod probably counts for more. If anything I get too much community love because I can write an entire post about myself without feeling shame.
EvilHenryPaulson Mon Mar 30 16:26:24 2009 CDT #
nades says:
LOL! I just had a conversation with myself on that last thread. I know what you mean! :-D
Parent Post
nades Mon Mar 30 16:37:19 2009 CDT #
Speed says:
My understanding is that the model was okay but the data was wrong. They used historical data from an optimistic period and heavily biased the results against the probability of mass mortgage defaults.
Speed Mon Mar 30 16:27:28 2009 CDT #
Some Investor Guy says:
I too built models on Wall Street. I was surprised at the things left out by competitors' models. Some of it was actually difficult to model, but some of it was quite easy.
Some Investor Guy Mon Mar 30 16:28:24 2009 CDT #
Tim waiting for 2012 says:
saw an article in the paper and a realator picked up one of these homes kicked out the squatters and is trying to flip it. Home prices will fall 75% in the edge cities.
Tim waiting for 2012 Mon Mar 30 16:29:07 2009 CDT #
Elrod says:
I hate Edge Cities.
Parent Post
Elrod Mon Mar 30 20:44:16 2009 CDT #
EvilHenryPaulson says:
Some Investor Guy;
Story time, pleeeeeasssseee
EvilHenryPaulson Mon Mar 30 16:30:17 2009 CDT #
citiprank says:
Speed.. that would be the oldest rule in computing GIGO
(garbage in, garbage out)
citiprank Mon Mar 30 16:30:34 2009 CDT #
hogjowls says:
So Jas, go back to Jainzania or wherever. We'll have one less of them.
hogjowls Mon Mar 30 16:33:04 2009 CDT #
Comrade Byzantine_Ruins says:
<i>Here’s one thing that’s definitely true: The software proved to be more sophisticated than the people who used it.</i>
Breaking news: engineer blames user.
Comrade Byzantine_Ruins Mon Mar 30 16:34:03 2009 CDT #
Bond Girl says:
Everyone wants to think he/she is special, I guess.
Bond Girl Mon Mar 30 16:34:08 2009 CDT #
Jas says:
--
Every born-and-bred American dope, that is. It is a particularly American disease not unlike optimitis.
Jas
Parent Post
Jas Mon Mar 30 17:01:31 2009 CDT #
Michael says:
Nova,
Gus the ugly dog: three legs, one eye and no hair ( And he is dead)
http://seattletimes.nwsource.com/html/entertainment/2008011082_eye22.html
I was going to say The Egyptian book of the Dead, but I thought Gus was a better answer. Humor me.
Michael Mon Mar 30 16:34:29 2009 CDT #
EvilHenryPaulson says:
Basic additional risk with CDOs that I see is the vulnerability to multiple modes of failure, rather than diversification away from them
That only applies if you are using an incorrect probability distribution which underestimates downside risk, which is what happened.
EvilHenryPaulson Mon Mar 30 16:36:09 2009 CDT #
jo6pac says:
Well we now know were the enron accounts went, to WS to enter the numbers into this wonderful software. I agree garbage in garbage out.
Nemo please just stay with what you have we're safer that way.
;)
jo6pac Mon Mar 30 16:37:40 2009 CDT #
citiprank says:
LOL Comrade Byz.. have you ever met some of these "users"?
citiprank Mon Mar 30 16:38:28 2009 CDT #
REBear says:
I just finished writting a piece of software that can automatically AAA anything you throw at it.
REBear Mon Mar 30 16:38:59 2009 CDT #
Nemo says:
Bond Girl --
Everyone wants to think he/she is special, I guess.
I was just thinking almost the same thing. Except I was thinking, "All of you people think you're so special."
Nemo Mon Mar 30 16:40:48 2009 CDT #
fastcart says:
Blaming the banks/wall st. is kinda silly IMO (and no, i don't work in finance- never did previously either).
What about the people who borrowed the 500K? It's kinda like when I run into people who tell me how deep in debt they are...it's strange b/c so far, 100% of the time I see them driving off in a car not less than 3 years old.
Hmmm..what could it possibly be?
fastcart Mon Mar 30 16:41:37 2009 CDT #
Rich says:
Computer programming skills are no substitute for local real estate knowledge. The program seems to have had one fatal flaw; it was based on false assumptions.
Rich Mon Mar 30 16:41:48 2009 CDT #
Bond Girl says:
This guy reminds me of Al Gore.
Bond Girl Mon Mar 30 16:42:27 2009 CDT #
JimPortlandOR says:
NY Times: <a href="http://www.nytimes.com/2009/03/30/us/30walkaway.html?pagewanted=1&_r=1"> Banks Starting to Walk Away on Foreclosures </a>
<i>
“The whole purpose of foreclosure is to take title of the property, sell it and recoup what money you can,” Mr. Cecala said. “It’s just a sign of the times that things are so bad no one wants to take possession of the property.”</i>
<i>
Mayor Stephen J. Luecke of South Bend added: “It’s just a crime the way it puts people in limbo. They first off have gone through the grief of losing their house, then they move out and find out that they still own it and have responsibility for it.”</i>
Including the cost of demolishing the property if the city condemns it.
Welcome to the new world of reducing housing supply.
JimPortlandOR Mon Mar 30 16:43:45 2009 CDT #
EvilHenryPaulson says:
You guys just don't get it. What the guy in the article did was to commoditize the garbage in. All those hidden assumptions -- used to take each banks days to find ways to hide them. With one subscription fee they save their precious time and abrogate corporate responsibility to a thinly capitalized shell corporation
EvilHenryPaulson Mon Mar 30 16:44:21 2009 CDT #
Bond Girl says:
Don't be offended, Nemo. I have a great affinity for programmers.
Bond Girl Mon Mar 30 16:45:22 2009 CDT #
lindismith says:
I recall reading a piece last year (in the LA Times, I think) of how the programmers at Countrywide were instructed to serve up (via the algorythm) only the loan products like Option Arms or Neg Am, as opposed to the loan that was actually right for the customer. Supposedly the broker using the software couldn't even see if there were other options available for his customers.
The amount of fraud was through and through each level of each player.
lindismith Mon Mar 30 16:45:34 2009 CDT #
No More Fed says:
"But in my view, and of course I’m inescapably biased, there’s nothing inherently flawed about securitization. Done correctly and conservatively, it increases the efficiency with which banks can loan money and tailor risks to the needs of investors."
I DISAGREE!!!!! It seems to me that securitization is really about producing MORE DEBT, and TOO MUCH DEBT is the problem!
I also think people should be more worried about the borrowers and NOT THE NEEDS OF INVESTORS!
No More Fed Mon Mar 30 16:46:07 2009 CDT #
Jim3 says:
I think you are right. I'd bet everything I have that none of this would have ever happened if the original lenders had to have held the debt to maturity, instead of being able to sell it on up the line.
There are numerous reasons why people thought their property could only go _UP_ in value--they ain't making more land, the market's on the upswing, Didja see how much those people made on TV the other day just by flippin' that house!?, etc, etc--but if the lender didn't provide the money, then the catastrophe couldn't have happened in the first place.
What we really need is much tighter control on the amount of money that can be created in the first place. Because in the end, the ultimate equation is the one between the real value of the economy and the money outstanding against it.
We got way, way away from that in the last 25 or so years.
Parent Post
Jim3 Mon Mar 30 21:55:47 2009 CDT #
citiprank says:
fastcart.. .the individual borrower is responsible for their OWN debt... The bank is supposed to behave so that the number of defaults is low .... in other words so that someone else's debt problem doesn't become YOUR problem or MY problem
citiprank Mon Mar 30 16:46:22 2009 CDT #
Lobbyi$t Ben Dover says:
Lets see I was just the driver for the mob. My job title included loading and unloading stuff into the trunk. I didn't know a dead body wasn't stuff. Judge, can I go home now?
Lobbyi$t Ben Dover Mon Mar 30 16:47:03 2009 CDT #
sportsfan says:
Sorry if a duplicate, but I don't see my comment:
It's a shame Mr. Osinski never learned about the concept of right livelihood.
He has done much damage to the world.
sportsfan Mon Mar 30 16:48:02 2009 CDT #
Nemo says:
I don't see how anybody could blame this guy; he was just following orders.
Nemo Mon Mar 30 16:50:33 2009 CDT #
EvilHenryPaulson says:
JimPortlandOR
Yeah, it would be nice if there was an adult out there able to reconcile the excess supply of defaulted, but often not foreclosed, housing stock with the demand for labor mobility and renters who want to buy a home without having to pay a cut to a hedge fund that sells individual houses from a pool bought from a taxpayer supported bank at a discount, or deal with the speculator dominated courthouse auctions
*hint* US govt bureaucrats, aides, etc... this is a win-win-win situation, with the option of a 4th win when it comes to privatizing the service in future and the definite silent 5th win when kickbacks come into play
EvilHenryPaulson Mon Mar 30 16:52:15 2009 CDT #
Bond Girl says:
I think he wants the attention, from reading the article.
Bond Girl Mon Mar 30 16:52:27 2009 CDT #
World Economy says:
My reaction to the article is "get over yourself"
He was no more integral to this disaster than the deli delivery person who fed idiot investment bankers.
Parent Post
World Economy Tue Mar 31 02:49:13 2009 CDT #
scone says:
I did some stock acreening and analysis software for some bankers about 20 years ago. They gave me the inputs, outputs, some equations, field definitions, etc.., but I had no idea what it all meant. They used the reports to do financial futures trading, and again, I had no idea what was up. The mad scientists don't necessarily tell their Igors what they're up to.
scone Mon Mar 30 16:52:37 2009 CDT #
Anonymous says:
Build a powerful intricate sophisticated toy and hand it over to babies to play with-Who is the Albert Einstein of the Industry by the way? You need one.
Anonymous Mon Mar 30 16:54:41 2009 CDT #
donna says:
Well, this article explains a lot...
Especially about why it is a bad idea to let people with "one course in computers" and no experience in your industry write your software.... gah.
donna Mon Mar 30 16:55:09 2009 CDT #
EvilHenryPaulson says:
Nemo,
I believe you are trying to cause an event known as a Godwin, named after Mike Godwin in 1990 for a famous post on Usenet
Bond Girl,
I believe my original comments on the story were along the lines of "everyone has their own tell-all story now"
EvilHenryPaulson Mon Mar 30 16:55:57 2009 CDT #
mistah charley, ph.d. says:
Australian economist Steve Keen has read Osinksi's story and supposes - since it's not explicitly mentioned otherwise - that Osinski's model used unrealistic probability distributions (i.e. the sort of thing that Taleb complains about).
http://www.debtdeflation.com/blogs/2009/03/31/osinskis-manhattan-project/
mistah charley, ph.d. Mon Mar 30 16:56:24 2009 CDT #
sportsfan says:
OT to EHP,
Thanks for your replies on AIG and CDS a few nights back. I was so bleary eyed that night I didn't even see them until I went back to look for yogi's reply the next day.
(I still haven't seen a considered legal opinion on how the CDS would have been treated had AIG been forced into BK. Hopefully, there won't be a need for AIG to file BK at this point - but I've been surprised before.)
sportsfan Mon Mar 30 16:58:24 2009 CDT #
Lawyerliz says:
As to brokers not being aware of fixed rate loans that's just nonsense. My broker buddy used Countrywide a lot and they did want him to go neg am or whatever, but he would tell them his clients wanted a fixed rate loan and that was that. He zapped them over yield spread premiums, but he believed in fixed rate and that's what he sold.
Lawyerliz Mon Mar 30 16:58:38 2009 CDT #
Bob Dobbs says:
Few people ever make more more than a certain amount of money quickly without bending ethnical corners because, if you do, you'll make more money faster and, dude, it's all perfectly legal.
When your job is just to load the bombers, it's fairly simple to convince yourself that it's not your fault where the bombs fall. Humans are good at that kind of thinking.
Just estimating, this guy grossed several mil in the last five years of his professional life loading the bombers, and would have gone back to loading them if he'd been free to do so. And by that point.... he kinda knew.
Bob Dobbs Mon Mar 30 17:04:06 2009 CDT #
Lawyerliz says:
How dreadful to have producing this program will be the thing you are remembered for.
If I had done that, i would be so ashamed that I'd hide it as deeply as I could. Maybe what we need is not so much morality, but shame.
Lawyerliz Mon Mar 30 17:05:35 2009 CDT #
Bob Dobbs says:
"If I had done that, i would be so ashamed that I'd hide it as deeply as I could. Maybe what we need is not so much morality, but shame."
Maybe somebody should stand in his driveway. Worked in Connecticut.
Bob Dobbs Mon Mar 30 17:07:38 2009 CDT #
cd says:
come on nemo right a script to unwind these cdo's, you'll be famous, make millions, free hookers, some glen livet, an article or 2 and I imagine some blow if you need it....
1970's redux
cd Mon Mar 30 17:08:30 2009 CDT #
CRbot says:
New Thread: Autos: Cerberus Loses Equity, New GM CEO Says Bankruptcy
http://www.calculatedriskblog.com/2009/03/autos-cerberus-loses-equity-new-gm-ceo.html ( 0 comments ...You could be FIRST! )
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CRbot: Call me HAL.
CRbot Mon Mar 30 17:08:31 2009 CDT #
Anonymous says:
A group of African-American lawmakers summoned Federal Reserve Chairman Ben Bernanke to Capitol Hill on Monday for a closed-door meeting aimed at making sure minorities and women get their share of the billions of dollars in federal bailout funds.
http://www.reuters.com/article/bondsNews/idUSN3036533620090330
Right down the path of ahy good old fashioned banana republic. HHHHAaaaaaaaa
Anonymous Mon Mar 30 17:09:11 2009 CDT #
the man from nantucket says:
what is this "software" you people speak of?
the man from nantucket Mon Mar 30 17:10:06 2009 CDT #
Doc at the Radar Station says:
The Genius of Capitalism
http://www.salon.com/comics/tomo/2009/03/24/tomo/index.html
Doc at the Radar Station Mon Mar 30 17:10:54 2009 CDT #
Anonymous says:
"Blaming the banks/wall st. is kinda silly IMO (and no, i don't work in finance- never did previously either). What about the people who borrowed the 500K?"
In "walk away" states like California, you're talking about non-recourse lending where the risk of fall in asset price is on the lender. Walking away from an underwater mortgage is often the right business decision.
Even if the borrower is personally liable, the lender didn't care if it could be paid back so long as they could sell the loan to the securtization market. If you offer a poor person money, they are going to take it. It's appealing to blame the borrower but the lender is really at fault here.
Anonymous Mon Mar 30 17:12:28 2009 CDT #
cd says:
he wasnt the only one who built some credit decisioning software, just one of many..
programmers need salepeople no matter what they build....bcse they can't sell..
cd Mon Mar 30 17:16:34 2009 CDT #
steelhead says:
An interesting article about SEC oversight.
http://www.counterpunch.org/whitney03302009.html
steelhead Mon Mar 30 17:17:47 2009 CDT #
briwerk says:
I blame everybody.
briwerk Mon Mar 30 17:22:39 2009 CDT #
Anonymous says:
except yourself of course.
Parent Post
Anonymous Mon Mar 30 20:29:39 2009 CDT #
Blackhalo says:
"In "walk away" states like California, you're talking about non-recourse lending where the risk of fall in asset price is on the lender."
The added risk in non recourse states should be added in to the interest rate, should is not?
Blackhalo Mon Mar 30 17:23:00 2009 CDT #
Bernanke\'s Barber says:
Ahh those loveable comp sci kids and their crazy C++ programs.
He's right though ---- you're asking for trouble when you take sophisticated software for finance/engineering/stats and you put it in the hands of the "plug and chug" crowd.
Bernanke\'s Barber Mon Mar 30 17:26:48 2009 CDT #
Bernanke\'s Barber says:
and also lol @ wanting to hang a comp sci kid over the writing of the software. how about his masters?
Bernanke\'s Barber Mon Mar 30 17:28:00 2009 CDT #
Anonymous says:
The added risk in non recourse states should be added in to the interest rate, should is not?
------------------------------------------------------------------------------------
That might spoil the fraud, game err I mean business...had a friend who worked in LA and rented in OC during the 90's (was it OC bankruptcy?)-rather amusing that this current event was seen as NEW-jingle mail good one.
Anonymous Mon Mar 30 17:30:01 2009 CDT #
im1dc says:
"But in my view, and of course I’m inescapably biased, there’s nothing inherently flawed about securitization. Done correctly and conservatively..."
Yea, if only, but the problem is that securitizationn is flawed precisely b/c in was enthusianstically done to defraud/fool buyers, i.e., not correctly or conservatively.
im1dc Mon Mar 30 17:53:04 2009 CDT #
lama says:
That's almost as bad as making a living calculating how much of your tax money is being wasted in Iraq, Afghanistan Kosovo and other miscellanistans.
lama Mon Mar 30 18:04:35 2009 CDT #
donna says:
He didn't say he was a comp sci kid -- he said he took one class. This is like the 90s java programmer craze of the dot bomb era.
Good comp sci people are trained not just in hacking code, but establishing software requirements, providing reasonable reviews of software, etc. Just like good business and finance people are trained not to be idiots making stupid deals.
Why have we created a society that doesn't care anymore about competence? That's the real question in all of this, and the answers are sadly what's really wrong with our society. The financial stuff -- that's all just the symptom of a society gone bad.
donna Mon Mar 30 18:43:04 2009 CDT #
Anonymous says:
Sorta reminds me of the guy (same for both inventions) who came up with the idea to use the air conditioning element that caused havoc on the ozone, and, also, of using leaded gasoline to reduce engine knock. :-E :-E
Anonymous Mon Mar 30 19:49:48 2009 CDT #
icedtea1954 says:
You shouldn't feel guilty. There's nothing wrong with what you did. Securitization is an extremely valuable tool, and - - yes, used correctly - - allows capital to flow efficiently to where it can best be utilized.
The problem isn't in your code, it's in the fundamental structure of the banking system. The people who work in the system can get huge rewards for making successful bets, but they don't share in the risks they are taking. That means they will always take bigger and bigger risks, until either a) the regulatory system stops them; or b) the system crashes and burns.
The recent financial system collapse was a direct outcome of a toothless regulatory system, not your code.
icedtea1954 Mon Mar 30 20:02:04 2009 CDT #
briwerk says:
This is a test of the CRbot synchronization system.
briwerk Mon Mar 30 21:27:12 2009 CDT #
briwerk says:
This is a test of the CRbot synchronization system.
briwerk Mon Mar 30 21:56:21 2009 CDT #
Jim3 says:
I was trying to reply to the comment of "No More Fed."
Jim3 Mon Mar 30 21:59:08 2009 CDT #
briwerk says:
This is a test of the CRbot synchronization system.
briwerk Mon Mar 30 22:02:27 2009 CDT #
briwerk says:
This is a test of the CRbot synchronization system.
briwerk Mon Mar 30 22:04:24 2009 CDT #
Jeff says:
If he didn't do it, someone elses would have. It's not like someone would have said, "Well, Osinski isn't on board, lets just give up this whole computer software thing. Anyone here have a slide rule?!"
Jeff Mon Mar 30 23:14:01 2009 CDT #
Anonymous says:
It's ridiculous to blame any one single group for the crisis.
Everybody was feeding from the trough all the way up the food chain...
Anonymous Tue Mar 31 01:19:33 2009 CDT #
Anonymous says:
Tanta would say "Hoocoodanode !"
Anonymous Tue Mar 31 02:50:57 2009 CDT #
END