The Bank That Ran Out of Money

Over the Christmas break I started watching the tale of the RBS, Inside the Bank That Ran Out of Money. This is the story of how one of the most successful banks in the world ran up the biggest corporate loss in history, a loss of €24.1Billion. 

There have been many reasons offered for the cause of the 2007 and 2008 global financial crisis including availability of easy access to loans for subprime borrowers, overvaluation of bundled sub-prime mortgages as well as the result of "high risk, complex financial products. It is the creation and evaluation of high complex products that caught my interest. Basically mortgage derivative products, where risky mortgages were packaged with more traditionally secure mortgages and sold to corporate investors and other banks as secure investment products.

The documentary RBS, Inside the Bank That Ran Out of Money interviewed an ex-executive of the bank who described how some of the best mathematician and physicist were running complex financial models to evaluate risk and predict earnings.

I wanted to look at the type of the mathematics and modelling that is used in the financial sector. Amongst numerous factors, some say the Black-Scholes equation was the mathematical justification for the trading that ultimately helped plunge the world's banks into catastrophe. The equation, brainchild of economists Fischer Black and Myron Scholes, provided a rational way to price a financial contract when it still had time to run. And the equation itself can’t be blamed for the credit crunch.

The formula is fine if it is to be used sensibly and abandoned when market conditions become inappropriate. The trouble was its potential for abuse. It allowed derivatives to become commodities that could be traded in their own right. Courtesy of Wikipedia here is the equation.

When Happiness and Depression Meet

About a year ago I wrote about happiness and what it is that makes us happy. It turns out that what makes us happy, what motivates us, follows the philosophy of Autonomy, Mastery and Purpose. We do things for ourselves that help grow us and are important to us, we do things that we have to struggle with to improve ourselves, and we do things that make us part of a bigger world, and all of these three things have the capacity to make us happy or happier.

http://appliedpsychologyresearch.blogspot.com.au/2012/03/happiness-is-synthetic-so-why-not.html

I wanted today to check, basically, how users of Google search for information associated with happiness and depression. This is essentially search volume index over time. As you can see above there is a fascinating convergence between these two search volumes. As the search volume for Depression decreases over time, the search volume for Happiness has increased to almost the same volume matching Depression. Even when you ask Google to extrapolate these trends (in dotted lines) the trend continues.

A new twist on play therapy

What will be the types of toys kids will be playing with in 10 years time? It’s not always that easy to look into that murky crystal ball to make predictions l0 years out. But there are a number of clues and they involve technology and mechanics. Not only is technology getting faster, cheaper, smaller but it’s also much more ubiquitous. Who would have imagined, for example, that an electric motor would be driving a toothbrush before the 60’s. Oh, and before I forget, batteries seem to be lasting longer too.

So we can pretty much say that toys of the future will include technology featuring speed, miniaturization and low cost. We can go a step further and throw in high-speed connectivity allowing the toy to connect with its manufacturer (let’s say creator), connect with data-stores providing it with new game options, scenarios and adaptations. But perhaps more importantly, these toys may be able to connect with other toys of similar genre as well as ground themselves through GPS.

So how about imbedded technology breathing life into the toys of the future; personality traits, memory, copied (learned) behaviors, learning abilities, and probably (and crucially) an ability to interact with kids. I don’t just mean a traditional computer screen but toys that might search and hold eye gaze, listen and speak in multiple tongues, learn their environment and navigate that space.

What about toys acting as communication devices, toys as therapists (a new twist on play therapy), toys helping with homework, toys acting as smart agents, toys prompting kids to do their choirs and even toys that quit playing when kids become naught or not nice.

Another name for McDonalds

With McDonald’s re-naming some of its stores to Macca’s in an Australia Day promotional I was interested to see what others around the world call the famous fast food restaurant. Here are a few, though not necessarily official expressions.

McDonald’s is also known as the Golden Arches,

• McDo (France)
• MacDoh (Quebec)
• MacDee (Indonesia)
• McDonas (Mexico)
• Mak Kee (Hong Kong)
• McDee’s (New Zealand)
• McD’s (Scotland)
• Mackidannkan (Sweden)
• Meki (Hungary)
• Mec (Romania)
• Mek (Holland)
• MacDohNo (Khmer)
• McDo (the Philippines)
• Pat Panepinto Mart (Chile)

Random isn't always random

Random Patterns

Have you ever looked at what is supposed to be a random set of numbers and think some numbers appear more so than others.

It turns out that in a given list of numbers representing anything from electricity bills, street addresses, stock prices, population numbers, death rates, lengths of rivers bout 30% of the numbers will begin with the digit 1. And less will begin with 2, even less with 3, and so on, until only one number in twenty will begin with a 9. The bigger the data set, and the more orders of magnitude it spans, the more strongly this pattern emerges.

The mathematical formula describing this digit distribution is called Benford's law, and its explanation, only discovered in 1998, has to do with logarithms and power laws. Simply put, it says that the values of measurements are more likely to start with the digit 1 than with 9 because there are typically more small things than there are big things.

Benford's law has been used in fraud cases to prove that a data set that doesn't conform to the law must be fraudulent. After all, when forging numbers, most people naturally assume that they should give all digits equal play to make the data seem random.

The emerging food pics fad

Is it just me that’s a little slow on the uptake of new fads. Would you know it – it seems there is an increase in the number of people uploading food pictures onto the Internet. A quick check of Google’s search volume index confirms the obvious. Yes, I know it’s been said before that a lot of people use social media to tell us about the sandwich they just ate. But, now, we also get to see the sandwich.

So is there an explanation to this latest fad? The answer is yes. But before that here are some staggering numbers to consider.

It is estimated that 2.5 billion people in the world today have a digital camera. If the average person snaps 150 photos this year that would be a staggering 375 billion photos. This year alone people will upload over 70 billion photos to Facebook. And Facebook’s photo collection has a staggering 140 billion photos. Also, at least once a month, 52% of people take photos with their mobile phones; another 19% upload those photos to the web.

And the the food pics - People are documenting their lives, or at least the gustatory portion of it. There are other reasons, too. Sometimes, it’s to celebrate the completion of a dish or a special occasion. Some are photographing “food art.”

The graphic provides a breakdown of some of the motivations for food picture uploads.