A Great Answer to Why?

Have you ever come across the annoyingly inquisitive five year old or the obnoxious drunk neighbor who keep asking you "why?" after every explanation you give them? In my opinion this answer is the best way to just end that never ending stream of "why?" Just simply say: anthropic multiverse.

Of the ten potential answers this article lists the anthropic multiverse answer is my favorite. The basic premise of this theory states that there are possibly an infinite amount of universes that allow life to exist. So if these universes allow life to exist and human beings live in one of the universes then by extension human beings do exist.

So why then? As the anthropic multiverse explains its just how it is. Fullstop, end of dicussion.

Cybersecurity

In my last post I implied that it did not appear as if Obama would steer away from previous Bush national security policies.

And it looks like this is true.

Check out CNET's "A Cybersecurity quiz: Can you tell Obama from Bush?" here.

Hmmmm? Bush's policies still alive as ever?

Cyberwarfare: A New Front in the Obama Adminstration?

It looks private companies are bidding for another national security sector to service to.

The NYT reports:

"And the race to develop weapons that defend against, or initiate, computer attacks has given rise to thousands of “hacker soldiers” within the Pentagon who can blend the new capabilities into the nation’s war planning.

Nearly all of the largest military companies — including Northrop Grumman, General Dynamics, Lockheed Martin and Raytheon — have major cyber contracts with the military and intelligence agencies.

The companies have been moving quickly to lock up the relatively small number of experts with the training and creativity to block the attacks and design countermeasures. They have been buying smaller firms, financing academic research and running advertisements for “cyberninjas” at a time when other industries are shedding workers." [May 30, 2009]

The rest of the article can be viewed here.

Why did I say "another national security sector" in my opening sentence?

Tim Shorrock in his very revealing book "Spies for Hire" described the fairly disturbing fact that a significant percentage of the United States' intelligence and national security services have been privatized. Bill Clinton expedidiated defense privitization but it reached an apex under the Bush administration to fight the Iraq War in particular. The infamous defense company, Blackwater, of course was a result of this trend and it looks like Obama will continue the privatization policy.

Shorrock in particular warns against the shoddy oversight that results from contracting out security and intelligence services. It is the military-industrial complex at its extreme, a development that former President Dwight D. Eisenhower warned against.

Here are some important passages that I am quoting from a salon.com article "When War Goes Corporate" by Chalmers Johnson on this subject:

"If there's one generalization to be made about the NSA's outsourced IT [information technology] programs, it is this: they haven't worked very well, and some have been spectacular failures … In 2006, the NSA was unable to analyze much of the information it was collecting … As a result, more than 90 percent of the information it was gathering was being discarded without being translated into a coherent and understandable format; only about 5 percent was translated from its digital form into text and then routed to the right division for analysis."

"As numerous studies have, by now, made clear, the abject failure of the American occupation of Iraq came about in significant measure because the Department of Defense sent a remarkably privatized military filled with incompetent amateurs to Baghdad to administer the running of a defeated country."

I cannot formulate a substantiated opinion on the merit of contracting to private companies to offensively and defensively fight cyber attacks on the United States. But Shorrock's book should alarm Americans on the dangerious nature of these private defense companies in a "private-public partnership". They are not truly beneficial for the United States' national security and defense. Privitizing cyberwarfare services to private companies might not be any different.

You can purchase Shorrock's book from amazon.com at this site.

Risk and Human Nature

I do not blame the Wall Street banker solely for this financial crisis, but I am curious as to why so many banks and traders made transactions based on dubious financial models in sketchy sectors like sub-prime mortgages? Wall Street is full of very motivated, skilled, wealthy, and confident individuals. Maybe this combination was exactly Wall Street's problem?

This question prompted me to rediscover Peter L. Bernstein's excellent book on the history of risk: Against the Gods: The Remarkable Story of Risk. I flipped to the chapter The Strange Case of the Anonymous Stockbroker and found this passage striking:

In 1990 [William] Sharpe, published a paper that analyzed the relationship between changes in wealth and the willingness of investors to own risky assets...Sharpe hypothesized that changes in wealth also influence an investor's aversion to risk...increases in wealth tend to strengthen the appetite for risk while losses tend to weaken it. [pg. 264]

I find this passage intriguing because it reminded me a great deal of an article I needed to read for a business class I took last semester. I can't remember the article's author or title, but it discussed at length McKinsey Consulting's very flawed advice to its client companies on rewarding "performing" and "talented" employees. McKinsey advised these companies to not only let its employees work in the most unfettered environment as possible, but to also reward them with a lot of money even if even if the employee messed up. In consequence, several employees were making loads of money by taking on risky and unfeasible projects. There was even a New York Times article published late last year that described how in 2006 100 employees at Merril Lynch broke the $1 million mark in bonuses even though they were taking on these risky sub-prime schemes.

With this in mind, I then proceeded to read Sharpe's original essay published in 1964 from the Journal of Finance titled, Capital Asset Prices: A Theory of Market Equilibrium Under Conditions of Risk. If you look beyond the math Sharpe's article basically outlines that investor preferences and behavior do influence the price of risk. You can refer to the article here.

And what about the conventional economic theory that rational human beings have "ambiguity aversion" (a term coined by Daniel Ellsberg in 1961) and therefore only make decisions based on the least ambiguous information as possible? Psychologists Amos Tversky (who along with David Kahneman created Prospect Theory) and Craig Fox set up an experiment to test this theory. They found that people do indeed bet on "vague beliefs"; however, they do so only in areas where they feel competent in.

The same NYT article I referred to earlier also questioned whether the Wall Street bonus system could have potentially contributed to the excessively risky behavior of Wall Street traders. Wall Street traders were being frequently rewarded for short term gain.

Did taking on so many risky bets in order to strive for more and more wealth turn out to be Wall Street's Achilles heal? From what I have gathered it is quite possible. I am not saying this is the reason, but it is an interesting theory.

Taking on huge risk based on irrational human behavior and flawed financial models in the quest to get rich quickly did not turn turn out not be a good combination at all. Who would have thought?

"Engrish" in Taiwan

For some reason I find "Engrish" to be absolutely hilarious. "Engrish", for the most part, is not deliberately written or said and that is why I am disappointed in myself that I find it so entertaining.

But here are few examples of some Engrish I have spotted in Kaohsiung, Taiwan:

"Predestination Hong Kong Tea Restaurant". What is a "predestination" restaurant anyway? Do the waiters read your palm while they serve you tea?

"The Tea of Cool. Craving. Content" The slogan of a bubble tea stall. The bubble tea is excellent though.

"Fashionable Rice"

"The bear of kindness has wanting human and the friends" I found this on a coffee mug.