Wednesday, October 19, 2011

FLG's Stream-Of-Consciousness Argument To Blame The French

FLG was listening to this interview with the author of this book about the creation of derivatives.

During the discussion, the interviewer suggests that part of the problem is that the quants are too "Platonic" and dealing too much in the abstract. Now, knowing how passionately FLG feels about Plato, many of you could guess how he reacted - there was a lot of screaming on the Lee Highway. But not long after the author mentioned a tension between those quants who had been trained in physics and those who had been trained in mathematics. Immediately, FLG rightly redescribed the problem not as Platonic, but Cartesian thinking. Ah, but then remembered something he'd read years ago:
Nicole El Karoui, a math professor in Paris. She teaches skills required to create and price derivatives, the complex financial instruments based on stocks, bonds or loans. "When I talk about El Karoui's master's, everyone knows" about the degree, says Mr. Charvet.

As derivatives have become one of the hottest areas for the world's biggest banks, Ms. El Karoui, 61 years old, has become an unlikely player in the business. Her courses at the prestigious Ecole Polytechnique and a state university, in such rarefied subjects as stochastic calculus, have become an incubator for experts in the field. A resume with her name on it "is a shortcut because you don't need to train the person on the basics of derivatives," says Rachid Bouzouba, a former student who is now head of European equity trading at the London office of Lehman Brothers Holdings Inc.

The derivatives departments at banking giants J.P. Morgan Chase & Co., Deutsche Bank AG, Dresdner Kleinwort Wasserstein, and France's BNP Paribas SA and Societe Generale SA include many of her protégés.

And so the financial collapse is the fault of French Mathematics professors. They, in turn, can blame the French philosophical tradition. Therefore, it is clear Decartes and the French Philosophes, whose high levels of abstraction, are to blame for the current financial economic malaise and basically everything that is wrong with the world right now. QED.

1 comment:

The Ancient said...

If there were a button over there on the side where we could vote on our all-time favorite FLG post, this one would tempt me.

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