JEREMY

You inadvertently hit on the answer!

We need a world war to be able to learn (again) from the past and start from scratch.

A war to end all wars! (have I heard that before?)

The present generation of politicians are now mostly born post WW2 and have no idea of the real suffering the previous couple of generations went through so they are going to be like the banks and start taking silly risks as they will NOT have learnt from the past.

Out of the ashes of WW3 a nice new mutant race will emerge - dribbling with insane optimism for a new world order.

WW3 is definitely overdue.

I am hoping to be dead before it starts.

Good luck to those who survive.

ALL

I do NOT have a yacht or a private aeroplane (though my last ex owned half a small flying machine with her ex)

My present girlfriend owns two horses and three dogs and HAD five cats but three disappeared when she moved over here.

I try and keep my overheads low.

I have just the one cat, one fairly economical car, just the one mother to look after andI did my best not to procreate but have two sons.

Yachts, planes, cars, pets and children can seriously damage your wealth.

I do, however, have a rather nice villa - without the almost mandatory swimming pool.

I prefer to use the facilities of a luxury complex with four large swimming pools etc for a mere 500 euro per annum which works out a damn lot cheaper than running your own paddling pool. I also buy 15 tickets at a time (costing 150 euro) for visiting friends so they don't have to pay the 20 euro daily charge.

Ever heard of 'Couch surfing'?

A couple of years ago I had a load of couch surfers stay 'chez moi' - once seven stayed in my place free of charge while I went off on holiday - a nice bunch and only one plate was broken [unfortunately it was antique].

Then I met my girlfriend and she objected to strange nubile wenches turning up on the doorstep.

I was devastated.

I enjoy having visitors.

I don't drink champagne, but like the odd bottle of wine.

You are all welcome............ in dribbles and as long as you don't have a 'smashing' time! :P

When people feel secure in employment, their living standards and confident for the future of their children they feel no need to go to war.

Economic hardship makes leaders pander to public prejudices to encourage blaming other races, religions or countries for high inflation, lowering living standards etc.

People whom one would imagine to be natural enemies can get on very well together when both parties are 'well off''.

I understand that in the Gulf states that wealthy Pakistani and wealthy Indians can get on very well together living side by side.

Poverty (physical, emotional and educational poverty) is probably the single largest cause of war.

Oh - and probably greed! :) -

but if you are a leader of a country in which the people are all 'happy' and content and have a high standard of living it's really quite hard to encourage them to risk their lives just to bolster your megalomania.

Anonymous 1 needed this 'Off the Record'

Jeremy Bosk and all.
Jeremy, thank you for your contribution at #407.
Nice to know that the FT agrees with my views on not delayintg the bank ring fencing.
Having looked through this morning's citywire summary of the papers, i note the following-
Sunday Telegraph-
Amid dire warnings that further regulation could stifle growth, the PM is tasked with finding a ring fenced model which will give banks more security and allow them to function as successful businesses.
Ring fencing banks is not the answer - the much awaited final version of the ICB report will be released on 12/09.
David Cameron wants to see a significant watering down of any proposals from the ICB to ring fencing the Uk's retail banks.
Not quite sure why ring fencing should be so disruptive.
After all banks are in business to lend not gamble. This is their bread and butter.
Also, ring fencing should help us keep the covetted AAA status.
Furthermore, it will create jobs, perhaps help absorb some redundant bank, civil service, local government staff.
The timing, not to be disruptive, could be for completion by 2015, with a specific time-table on timing limits of stages to achieve it.
I think the outcry by the bankers is more to do with ring fencing their bonuses etc, rather than the retail banks
What do you think?.

Prof Eman
Just an afterthough, another broken promise by the Lib Dems? At this rate they can wave good bye to being a force after 2015.

Prof,
You state:

"After all banks are in business to lend not gamble."

The above statement is an oxymoron.

http://www.wired.com/tec...p_quant?currentPage=all
http://www.economist.com...04/in_defense_of_copula

Are you proposing a socialized risk free credit system or would you prefer to let the Gaussian Copula do it for you.
Beware of men claiming they have got "risk" under control. Anyone who says that doesn't understand the differnce between risk and uncertainty.

Someone has to make the unpopular decision when to say "no" to lend money based on the likelihood of getting the money back.

Who, in your opinion, should that person be?

Jeremy,
My point is that the golden egg of banking (easy money) was well and truly cooked some time mid 2007.
The paradigm shift from blind faith to total distrust of such models was typical delusional behaviour quickly evaporating.

Risk takes two components (excluding correlation) - measured statistical variance (ie standard deviation) of outcomes of similar events, and the probability of a particular outcome. In other words we can say uncertainty is measurable. Correlation is the goodness of the fit of a particular model. But just because a model has a better correlation than another does not mean that the physics underlying that model is better than another. It could be that the systematic error in the data acquisition of the data set are skewed, or there is unrecognised physics at play in the system.

Talking about risk depends very much on context ie the model. Risk is low when a model is deterministic. That's to say that outcome of the model is not dependent on the starting conditions.

High risk is when a model is used that is known to be very sensitive to the starting conditions - the mathematics of chaotic systems will dominate.

The unforeseen is when a model is believed to be deterministic - like a dogma - yet not thoroughly tested, not robust.
This was surely the case with the Gaussian Copula.

One might argue that trend followers, speculators, algo and high frequency traders amplify the swings and break the models.
On the other hand it could be said that any model treated as orthodox should be tested to destruction.

Any way you choose it's a zero sum game.