This is when the things went bad

Requested page at Rhapsody.com

This is what interests me

Today was generally a very good. With the exception of my history class where my enjoyment of two interesting movies about Stalin and Hitler was diminished because of the girl who sat behind me and horribly smelled after previous night’s cheap beer, the day went really well.

It turns out that my general frustration from ES can be alleviated if one makes a strong case for himself.  On Monday I went to talk to the El Professore to voice my concerns about the class as such, specifically about the faulty method of testing, and while I did not manage to persuade him to change it, articulating my determination clearly affected the test and assignment grades. So once again I’m on the road towards 4.0.

And then I picked up the latest issue of Wired. Normally I would pass this magazine due to lack of free time (I generally only read economic magazines and American Scientist or New Scientist, if either features anything about genetics or evolution in general), but this time the cover drew my attention. The main story of the issue is “Recipe for Disaster: The Formula That Killed Wall Street” (available online here) and it explains what went wrong with the risk assertion.

In late 1990s a new formula for determining probability of default was created; it is called Gaussian copula and looks like this:

The explanation of individual parts is available in the article.

The formula became revolutionary because it was based on correlation of default values of the two securities based on current prices at the CDS (Credit Default Swap, an insurance against default) market. So instead of looking up and analyzing decades’ worth of empirical data, the security could be priced almost instantly based on the current market price.

Unfortunately, the model is flawed. By bundling various types of underlying assets into one security (CDO, Collateralized Debt Obligation), the probabilities became distorted, and for simplicity only the promising were taken into consideration. And then everything went sour.

Anyways, the mix of computer science and math that turns out to be finance (or just economics) is what I immensely enjoy. Last night I finished a critique for my Microeconomics class, and I was almost mesmerized by the analysis and conclusions of my underlying article on the price sensitivity of Dutch health insurance.

I cannot wait for this semester to be over. Not because I did not enjoy my classes (CS and Econ are great and so is History and Math, ES is a different story), but I feel that I spend most of my time and effort on classes that are of marginal importance to me (Hist and ES), and that prevents me from going deeper into CS and Econ. But next semester will be different — I am currently aiming to take two CS classes and Intermediate Macroeconomics and Finance. If only I could squeeze a class on probability in there…

Exhausted

Albeit getting a plenty of sleep during the weekend and even last night (roughly eight hours each weekend night and five the past one), I feel extremely tired. I might be starting to develop a burnout syndrome, as most of the school work I have been lately doing was tedious, uninteresting, and irrelevant to my major — I am talking about you, damn Environmental Sciences.

I have never thought the idea of throwing a shoe at someone might appeal to me. Today I daydream about throwing my shoe at the person who signs his emails El Professore.

How business should be done: Politico

The New Republic featured a story on Politico.com, a “hyper-caffeinated Washington news source.” The more I was reading the more I was concurring its business model built on speed and activity — no opportunity can be missed.

Most metropolitan newsrooms wake up slowly. Not Politico, where speed rules. Reporters are expected to post items by the time congressional aides and White House staffers have their morning meetings. VandeHei has been known to e-mail staffers at 5:30 a.m., and reporters are posting items by 8. Almost all Politico staffers are given laptops and wireless modems so they can work anywhere. (They are also permitted to file news on any subject–including on anyone else’s beat–if they have the goods, which has led some staff to complain about the free-for-all.)

TNR: The Scoop Factory

Currently writing an essay on: Burmese Days

[Westfield: ] “Reminds me of the old colonel who used to sleep without a mosquito net. They asked his servant why and the servant said: ‘At night, master too drunk to notice mosquitoes; in the morning, mosquitoes too drunk to notice master.’”

Short note on insanity

If this is not insane than I do not properly understand the meaning of that word.

Thank God my self-discipline is so high, because not adhering to the work limits I imposed onto myself could be deadly.  Sometimes last week I declared that no matter how much work is left to be done, I will be exiting the library at 4am. Yesterday was the first day when I actually left earlier, at 3.10am.

I am wondering what it is that’s clogging my schedule so much. Perhaps it’s the amount of reading I have virtually every day (despite meeting at 8.30am, the history class is amazing but tanking). Plus the CS assignments are considerably time-consuming (I don’t want to imagine how much time must the others, inexperienced in programming, must spend on them), so are those for Math and lately also Econ. Furthermore, Econ should get significantly harder as the semester progresses. I run or lift weights daily to compensate for the mental effort I required to make during the rest of the day. Surprisingly, I seldom feel tired after any exercise and I am getting more and more inclined towards believing in my own hypothesis that the battling of physical fatigue during exercises increases my stamina and decreases the number of hours my body needs to sleep.

By the way, my current mileage reads 77 miles over the past month. I am scheduled to break my first 100 miles.

Two observations from my today’s history class

1) political correctness dramatically hinders discussions about imperialism. If Social Darwinism was one of the reasons for imperialistic behavior, it should be acceptable to share even theories denounced by this overly caring world, such as the one voiced by James E. Watson. I didn’t tried it, I feared being frowned upon.

2) especially after my suggestion of several parallels between the Spanish-American war and the Iraqi war.

The Economist: Obamaville — it gets better!

The effort in St Louis to rename Delmar Boulevard is not certain to succeed. Some wiser heads recall that a decade ago the city renamed part of an interstate highway after Mark McGwire, a baseball player for the St Louis Cardinals whose record-breaking home runs were later tainted by accusations of steroid use.

Glorifying a president may be tempting fate again.

The Economist: Obamaville

Municipalities across America are racing to rename some of their streets and schools after Obama before he is inaugurated next Tuesday (I am honestly wondering why). Here is an excerpt from a paragraph that caught my attention:

“Rural, mostly black Perry County, Alabama, has already gone one better, declaring the second Monday of November as Barack Obama Day. Government offices will be closed and the county’s employees will have a paid day off.”

Way to go indeed! On the other hand, the craze has also one positive side:

“Fueled by a deluge of Obama products from commemorative coins to hand towels, from bobbing-head dolls to glossy books, the Obama industry is one of the economy’s bright spots.”

Which reminds me of:

Perfectionism and evolution

Continuing in a series of short and meaningless post, I am only sharing with you my favorite cartoon from this week’s New Yorker.

I have been going through the study guide (last year’s test) we were provided for the preparation for our Seminar final and deeply in the description it says we can use course texts and notes in developing our answers — I am wondering whether that means developing our arguments with our notebooks open or just arguing from our memory… Nonetheless, I have spent past eight hours reading and taking notes, upon which I drew five quite elaborate mind-maps that cover every major topic we discussed since October. I am wondering how much of the test will be based on the required readings only a handful of people did; and I am wondering whether completely off-topic answers from those who didn’t do the readings will be accepted. Sadly, there is a regrettable precedent.

One of the topics concerned deals with the metaphor of God the Watchmaker. I honestly wish this was one of the essay questions — I have read many texts vindicating this metaphor, and even greater number ridiculing it. Ever since firt touching Richard Dawkins’ The God Delusion I have wanted to discredit the argument of Junkyard Tornado.