The use of the words "risk" and "uncertainty" in vernacular English leaves the relationship between the words imprecise. That is, if I were to ask you, dear reader, what is the difference between risk and uncertainty, there would be no univocal "right" answer, though the words clearly are not synonyms. In general, we think of risk as a less-than-certain loss, so uncertainty figures into it, but uncertainty figures into a lot of other words too (such as "hope," which we think of as a less-than-certain gain). In finance, and in other areas as well, there has been some movement toward using the two words in a rigorously paired way, such that, to borrow a formulation from the George W. administration, "risk" represents the known unknowns of a situation, "uncertainty" represents the unknown unknowns. Here's a straightforward example: I know that a certain stock is interest-rate sensitive. I know that the Federal Reserv...
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The two contending forces resolved their dispute arising out of the San Bernardino terrorist attack. It turns out the FBI didn't need Apple. The US government can hire hackers who can get into the phone. That was bad news for Apple's brand (unhackability is part of the mystique), but good news for what remains of the fourth amendment. It is an awful business having courts order private companies to help the government open doors to their products, especially when those products have an intimate character for so many of their buyers. Yet the FBI doesn't want that much to remain of the fourth amendment. So it, and the D of J, have re-started the fight, this time over another phone. The Justice Department said on April 8th that it is going to seek a court order to force Apple to help it unlock an iPhone that was seized as part of a New York drug-traffic investigation. This was a front page story in the weekend Wall Street Journal. Still, it faded from public attention q...
In the front matter of the December issue of Harper's, Rebecca Solnit writes about the climate change talks in Paris. I'm afraid I can't follow her points very well, because my mind has been distracted to the guessing game of when she wrote this essay. It was obviously written before the Paris talks, which concluded with an agreement December 12th . The political/diplomatic leadership of the 196 nations involved committed to keeping global warming at or below 2 degrees Celsius above pre-industrial levels. Solnit essay was not only written before that (and phrased sensibly in the future tense), it was probably written before the terrorist attack on the streets of Paris on November 13, 2015. She writes of "the possibility that the most important activity in Paris this month will happen not in any meeting room but in the place where most revolutions happen: the streets." Context indicates that she meant that scruffy activists in their street demonstratio...
I can't imagine how I would improve on Janet Tavakoli's commentary on this situation. So I'll just steal it. ------------------------------ I thought this sort of incompetence was contained in the financial world. But the "investigation" into the California jihadists tells you all you need to know about D.C.'s lack of ability to govern. ABC News confirmed that Malik, the female San Bernardino shooter, gave a fake Pakistani village address on her visa application. She also belonged to a mosque tied to terrorism when she lived in Pakistan. Yet she got a green card last summer. This is an example of what you can expect of "background checks" and refugee "vetting." The FBI is supposedly investigating the San Bernardino shootings as terrorism. Well, let's see, the female shooter posted support for ISIS on her Facebook account at the same time POTUS claimed we were safe from ISIS. It seems terrorism is an easy case to make. But wait! Wh...
Janet Tavakoli has a new book out entitled Unveiled Threat: A Personal Experience of Fundamentalist Islam and the Roots of Terrorism. Yes, I know. There are hordes of people these days wielding pens (or keyboards) these days to give their view of the world's discontents and the violently discontented. One can't keep up with them, nor should that be an aspiration. But I know Tavakoli. We aren't close friends but we are work acquaintances -- I have been happy to quote her as a source or to call her for guidance on ongoing stories. None of these ongoing stories has had a lot to do with terrorism. So this drew me up short. You see, Tavakoli is an expert on "structured finance." her firm, unsurprisingly called "Tavakoli Structured Finance Inc." offers as her webpage says "independent risk consulting and expert witnesses services ... for derivatives, credit derivatives, synthetic collateralized debt obligations, total return swaps, special purp...
I expect that if I don't say something about this subject I will soon be the only regular blogger in the northeastern United States who hasn't. My sympathies of course to the victims of the Boston Marathon bombing, the dead and the injured and the families of both. The death of someone as young as Martin Richard is always especially heartbreaking. But you don't come here for the usual hearts and flowers dear reader. Let's see if we can say something not already said. We can do so if we turn our attention to the manhunt, which began in earnest Thursday evening with another crime, the murder of a security officer at the Massachusetts Institute of Technology. Late Thursday evening, Sean Collier, responding to a disturbance, was shot and killed. That set off a wild 24-hour period that ended with one of Collier's murderers dead and the other in custody. Perhaps this is something of a take-away. We're often told that government is necessary to keep people ...