financial musings of an aesthete

A passage in Henri-Frédéric Amiel's journal, quoted from here:

April 14, 1866

Panic, collapse, a general rout at the Bourse in Paris. My poor remaining funds are dropping, dropping! In our epoch of individualism and “every man for himself and God for all”, the trepidations of the public funds resemble the palpitations of the heart. One feels an obligatory sympathy, somewhat suggesting the patriotism of one’s compulsory taxes; one is constrained to keep an eye out on the follies of Prussia and America, one feels engaged, compromised in all the world’s affairs, and so one has to take an interest, in spite of oneself, in the terrible machine whose wheels may at any instant crush us.

Credit gives birth to an unstable society, whose trembling base and artificial structure perpetually menace its security. It sometimes forgets that it is dancing on top of a volcano. But the least rumour of war pitilessly brings this back to mind. Houses built of cards are easily ruined.

This anxiety is unbearable for humble little bondholders like myself, who, renouncing the pursuit of riches, would at least have liked to attend to their modest labours in peace. But no; the world is there, and like a brutal tyrant, it cried to us: Peace, peace, there is no peace; I mean you to suffer, laugh and skip about with me. And when one reflects that five or six crowned rascals, or merely gold-braided rascals, hold in their hands the tranquillity of the world, and are able to martyr at their caprice the destiny of several millions of their fellows, one feels a little irritated.

This passage is comparatively flavorless in Mary Augusta Ward's translation, which I'm reading right now. For example, the sentence "My poor remaining funds are dropping, dropping!" is omitted.

Wikipedia has scant information on the Panic of 1866. The Internet Archive has an contemporary account.

See also: a real estate boom.

second draft manuscript

A second draft manuscript of Suldrun's Garden:

From the webpage of Tim Stretton. First spotted at the Jack Vance Message Board.

I wish authors employed some kind of version control software, so that we could trace the development of novels in minute detail, starting from when pen is first put to paper, through subsequent growth and revisions, until the final version.

However, version control may have too much granularity. It would not distinguish between authors who write their sentences in spurts only to revise them later, and those who meditate obsessively on every word before committing it to the page. ¿How about a keylogger, then?

a profusion of days, a waste of longevity

When one reflects on the state of this strange being [a tortoise], it is a matter of wonder to find that Providence should bestow such a profusion of days, such a seeming waste of longevity, on a reptile that appears to relish it so little as to squander more than two-thirds of its existence in a joyless stupor, and be lost to all sensation for months together in the profoundest of slumbers.

—Rev. Gilbert White: The Natural History of Selborne.

To one of middle age the countenance was that of a young man, though a youth might hardly have seen any necessity for the term of immaturity. But it was really one of those faces which convey less the idea of so many years as its age than of so much experience as its store. The number of their years may have adequately summed up Jared, Mahalaleel, and the rest of the antediluvians, but the age of a modern man is to be measured by the intensity of his history.

—Thomas Hardy: The Return of the Native.

It would be neat if lifespan were not determined by biological age, but instead by "intensity of history". That is, people who drive Ferraris, hunt elephants and lions in the savannah, and routinely bed beautiful women, would consume their lives faster than those who spend their weekends alone at home, watching TV and eating pizza. At the time of their deaths, all persons would have had the same total amount of fun. This is the only equality that counts, really.

But two assumptions are neccessary for it to work. First, that eating pizza in solitude conveys a positive amount of fun -however small- and not a negative one. Second, that there exists a number N (possibly very high) such as that, when N or more pizzas are ingested throughout a series of solitary weekends, they convey an accumulated pleasure equal or superior to the one involved in bedding a beautiful woman during a one-night-stand. (It may well be that sexual pleasure is measured in real numbers, while pizza pleasure is measured in infinitesimals.)

if bonfires are stars

The following passage from Thomas Hardy's The Return of the Native caught my attention:

The bonfire was by this time beginning to sink low, for the fuel had not been of that substantial sort which can support a blaze long. Most of the other fires within the wide horizon were also dwindling weak. Attentive observation of their brightness, colour, and length of existence would have revealed the quality of the material burnt, and through that, to some extent the natural produce of the district in which each bonfire was situate.

If you take the bonfires as representing stars, the passage works as a metaphor for astronomical spectroscopy. Did such discipline even exist when Hardy wrote the novel?

I have a problem with names

I have a problem with names. I forget which belongs to whom; I inflict the wrong ones on unsuspecting persons, to their chagrin and mine.

This happens with people I meet on a day-to-day basis, and also with the more remote personages one finds in Wikipedia. Here's a trio I tend to get mixed up:

• Jean Baudrillard, the guy who directed the Matrix trilogy of films and followed the Iraq war on CNN.
• Roland Barthes, the guy who killed all the authors.
• John Barth, a guy who sets out to write Henry James novels but always ends up with a new John Barth tome instead.

After having taken the effort of writing those names, I suspect I have put an end to the confusion. The three names were fluttering around in my head like unruly butterflies, but now they all have been captured and neatly pinned down on their proper referents.

quarrelsome congregations

Entering the building [the Church of the Sepulchre] through the midst of the usual assemblage of beggars, one sees on his left a few Turkish guards - for Christians of different sects will not only quarrel, but fight, also, in this sacred place, if allowed to do it.

—Mark Twain: The Innocents Abroad.

All sects of Christians (except Protestants) have chapels under the roof of the Church of the Sepulchre, and each must keep to itself and not venture upon another's ground. It has been proven conclusively that they can not worship together around the grave of the leader of the World in peace.

—Ibid.

Priests of any of the chapels and denominations in the Church of the Sepulchre can visit this sacred grotto to weep and pray and worship the gentle Redeemer. Two different congregations are not allowed to enter at the same time, however, because they always fight.

—Ibid.

It's almost... comforting to know that fights at the Church of the Sepulchre are business as usual. I mean, at least things are not getting worse.

a cultural analogue to Darwin's finches

Not only birds differentiate across the islands of an archipielago, headwear does, too!

Here and there in the doorways we saw women with fashionable Portuguese hoods on. This hood is of thick blue cloth, attached to a cloak of the same stuff, and is a marvel of ugliness. [...] The general style of the capote is the same in all the islands, and will remain so for the next ten thousand years, but each island shapes its capotes just enough differently from the others to enable an observer to tell at a glance what particular island a lady hails from.

—Mark Twain: The Innocents Abroad, chapter V.

The Voyage of the Beagle predates the one narrated by Twain in The Innocents Abroad by about thirty-three years.

See also: Darwin's finches and this paper about them.

Death at Yale

Initiatives like MIT's OpenCourseWare and Yale's Open Courses are truly wonderful. Yay for the Internet! Some of the courses I try to follow when I find a spare hour here and there:

• PHIL 176 - Death, Spring 2007 (Yale).
• ECON 159 - Game Theory, Fall 2007 (Yale).
• ECON 252 - Financial Markets, Spring 2008 (Yale).
• Differential Equations Spring 2006 (MIT).

I'm finding the last one a most welcome refresher, since my knowledge of calculus had become exceedingly rusty.

P.S. This blog seems to be a good resource for finding this kind of material.

a real estate boom

From Chapter 57 of Mark Twain's Life on the Mississippi:

Keokuk was easily recognizable. I lived there in 1857--an extraordinary year there in real-estate matters. The 'boom' was something wonderful. Everybody bought, everybody sold--except widows and preachers; they always hold on; and when the tide ebbs, they get left. Anything in the semblance of a town lot, no matter how situated, was salable, and at a figure which would still have been high if the ground had been sodded with greenbacks.

I the middle of a housing bubble, it must be a dreadful feeling to know that all your mortgageaholic neighbours are getting richer by the minute, while you are being held back by your own boorish sense of prudence.

no more books from overseas

At least until the Dollar comes back from its trip into the stratosphere.

pisoteando dioses

Ayer fuimos a la exposición Un Día en Mongolia que se puede ver en el Kiosco Alfonso. La barroca y exuberante imaginería del arte religioso me llamó la atención. Algunas pinturas mostraban una gigantesca criatura de piel negra y ojos furiosos enarbolando una espada en llamas. Al parecer se trataba de un ser legendario defensor de las enseñanzas budistas. Evidenciando una cierta falta de ecumenismo, la criatura pisoteaba los cuerpos postrados de dioses hindúes, los cuales parecían ostensible y comprensiblemente incómodos. Uno de los dioses pisoteados era Ganesha (lo reconocí por la trompa, además hay una figura suya en el restaurante indio que hay cerca de la estación de trenes).

También había expuestos vestimentas e instrumentos tradicionales del chamán, lo que me recuerda que tengo que leer algún día el libro de Mircea Eliade sobre el tema. Un chamán famoso fue Teb-Tengri, que subía y bajaba del cielo en un caballo blanco y disputó a Gengis Khan el control de la horda mongola, pagando el desafío con su vida.

Otra cosa que me llamó la atención fue una especie de cerrojo que usaba como llaves unas láminas metálicas rectangulares de diseño abstracto. Tenían un aspecto incongruentemente moderno, ¡casi parecían tarjetas perforadas! Me gustaría tener un cerrojo parecido.

Por cierto, la biblioteca González Garcés tiene un ejemplar de La Historia Secreta de los Mongoles (editorial Miraguano) con extenso aparato crítico y abundantes anotaciones. Recomendado a los que quieran profundizar en el tema.

they're still there, somewhere

In his book Throwim' Way Leg, naturalist Tim Flannery mentions the resistance of New Guineans to the idea that species may go extinct under the pressure of excessive hunting. When faced with the fact that a certain animal is no more to be found in a certain zone, they simply point in the general direction of a nearby village and say "there are still plenty of them over there" (of course, inhabitants of that village would say the same, pointing in the reverse direction). Alternatively, they explain the absence by saying that the animal only shows itself to very virtuous hunters, who have undertaken exacting and complicated purification ceremonies.

This refusal to consider the possibility of extinction reminds me of Thomas Jefferson. In his Notes on the State of Virginia [1781], he wrote:

The bones of the Mammoth which have been found in America, are as large as those found in the old world. It may be asked, why I insert the Mammoth, as if it still existed? I ask in return, why I should omit it, as if it did not exist? Such is the oeconomy of nature, that no instance can be produced of her having permitted any one race of her animals to become extinct; of her having formed any link in her great work so weak as to be broken. To add to this, the traditionary testimony of the Indians, that this animal still exists in the northern and western parts of America, would be adding the light of a taper to that of the meridian sun. Those parts still remain in their aboriginal state, unexplored and undisturbed by us, or by others for us. He may as well exist there now, as he did formerly where we find his bones.

forty-three interpreters

From Gustave Flaubert's The Temptation of St. Anthony:

This light tissue, which crackles under the fingers with the noise of sparks, is the famous yellow linen brought by the merchants from Bactriana. They required no less than forty-three interpreters during their voyage.

"forty-three interpreters". What a wonderful way of conveying distance, spatial as well as cultural!

With modern advances in transportation, the hold products brought from far-away places had on our imagination has waned. What has succeeded it? The thrill of the early adopter. Farness in space substituted by closeness in time as a source of fascination.

Vaguely related:

• The Golden Peaches of Samarkand: A Study of T'ang Exotics.
• This podcast on EconTalk about the book A Splendid Exchange.

Maybe This Explains the Financial Crisis

There is a secret society of seven men that controls the finances of the world. This is known to everyone but the details are not known. There are some who believe that it would be better if one of those seven men were a financier.

—R. A. Lafferty: About a secret crocodile.

we have a certain air

A girl in a pub once said the following to a co-worker of mine:

"I bet I can figure out what are you studying without you telling me. Let me see, let me see... it's Computer Science, isn't it?"

She was right.

Years ago, I was in a supermarket queue waiting my turn to buy fish when, completely out of the blue, an elderly lady addressed me so:

"You are an engineer, aren't you?"

Yeah, I was. But I wasn't doing any particularly engineer-y thing at the moment; I was just looking at fish.

These diviners are sometimes capable of even subtler distinctions, truly astonishing feats of discernment. At a recent company dinner, a guest claimed to be able to sort out the members of the R&D department from among the members of the Engineering department, without any previous knowledge and just by looking at them.

Apparently, she was right most of the time.

Garbage In, Garbage Out

“They wanted to keep their capital base as stable as possible so that the limits they imposed on their trading desks and portfolio managers would be stable.”

One way they did this, Mr. Berman said, was to make sure the computer models looked at several years of trading history instead of just the last few months. The most important models calculate a measure known as Value at Risk — the amount of money you might lose in the worst plausible situation. They try to figure out what that worst case is by looking at how volatile markets have been in the past.

But since the markets were placid for several years (as mortgage bankers busily lent money to anyone with a pulse), the computers were slow to say that risk had increased as defaults started to rise.

It was like a weather forecaster in Houston last weekend talking about the onset of Hurricane Ike by giving the average wind speed for the previous month.

(Saul Hansell at the New York Times' Bits Blog: How Wall Street Lied to Its Computers)

On two occasions I have been asked,—"Pray, Mr. Babbage, if you put into the machine wrong figures, will the right answers come out?" [...] I am not able rightly to comprehend the kind of confusion of ideas that could provoke such a question.

(Charles Babbage, quoted in the Wikipedia page for Garbage In, Garbage Out. The original source of the quote is Babbage's Passages from the Life of a Philosopher, which can be found at Google Books. Note also that the second reference mentions the survey essay Computer Applications in Particular Industries: Securities [1981].)

inscrutability a plus

The current Connatic is Oman Ursht, sixteenth in the Idite succession: a man of ordinary and undistinguished appearance. In portraits and on public occasions he wears a severe black uniform with a black casque, in order to project an image of inflexible authority, and this is how he is known to the folk of Alastor Cluster. In private Oman Ursht is a calm and reasonable man, who tends to under- rather than over-administrate. He ponders all aspects of his conduct, knowing well that his slightest act a gesture, a word, a symbolic nuance might start off an avalanche of unpredictable consequences: hence his effort to create the image of a man rigid, terse and unemotional.

—Jack Vance: Trullion.

Because of the powerful leverage of the Federal Reserve System, public statements by the chairman of the Federal Reserve Board are scrutinized by bankers and investors for clues as to whether "the Fed" is likely to tighten the money supply or ease up. An unguarded statement by the chairman of the Federal Reserve Board, or a statement that is misnconstrued by financiers, can set off a panic in Wall Street that causes stock prices to plummet. [...] Given such drastic repercussions, which can affect financial markets around the world, Federal Reserve Board chairmen over the years have learned to speak in highly guarded and Delphic terms that often leave listeners puzzled as to what they really mean.

—Basic Economics: A Citizen's Guide to the Economy by Thomas Sowell.

Medieval Spain

• James F. Powers: A society organized for war. The Iberian Municipal Militias in the Central Middle Ages, 1000-1284.
• Bernard F. Reilly: The Kingdom of León-Castilla under Queen Urraca, 1109-1126 .

Both of these books are mentioned in José Luis Villacañas Berlanga's La Formación de los Reinos Hispánicos.

economic podcasts

Here. They have helped me understand a little better the subprime debacle. These ones look good too.

The following book from the Internet Archive also looks interesting:

• Money, Banking And Credit In Mediaeval Bruges [1948]

Edit. And the Concise Encyclopedia of Economics.

genius, or chance?

Skeptics of EMH argue that there exists a small number of investors who have outperformed the market over long periods of time, in a way which is difficult to attribute to luck, including Peter Lynch, Warren Buffett, George Soros, and Bill Miller. [...] Adherents to a stronger form of the EMH argue that the hypothesis does not preclude - indeed it predicts - the existence of unusually successful investors or funds occurring through chance.

—Wikipedia page for Efficient-market hypothesis.

During the “Manhattan project” (the making of nuclear bomb), Fermi asked Gen. Groves, the head of the project, what is the definition of a “great” general [1]. Groves replied that any general who had won five battles in a row might safely be called great. Fermi then asked how many generals are great. Groves said about three out of every hundred. Fermi conjectured that considering that opposing forces for most battles are roughly equal in strength, the chance of winning one battle is 1⁄2 and the chance of winning five battles in a row is 1/2^5 = 1/32 . “So you are right General, about three out of every hundred. Mathematical probability, not genius.” The existence of military genius was also questioned on basic philosophical grounds by Tolstoy [2].

—This paper on arXiv.