Friday, January 30, 2015

Not Another Degree

Every once and while, when FLG gets a bit bored, he starts pondering another degree.   For whatever reason, he thinks he doesn't know enough about international economics and finance.

There are two programs that FLG was looking at yesterday.  First, an MSc in Quantitative Finance from the University of London's external program.   Then, he started looking at the Master's in International Economics and Finance at SAIS.  And he realized something.  Something he has probably realized before, but he keeps forgetting --- with the exception of some of the more advanced technical statistical analysis courses, which he is mildly interested in, he's pretty much taken all of the available courses.

Here's the SAIS curriculum for example:
Macroeconomics - Done
Microeconomics - Done
Quantitative Methods I - Done
International Finance - Done
International Trade - Done
Quantitative Methods II - Probably done
Monte Carlo Simulation - No, would be mildly interesting
Quantitative Methods III: - Cross-Sectional Econometrics or Time Series Econometrics - No, would be mildly interesting

And there are the electives:
Advanced Topics in Trade Theory - Probably done some of this
Case Studies in International Finance - Done
Cost-Benefit Analysis  - Done
Credit Markets and Credit Risk - No, would be mildly interesting
Economic Development - Done
Financial Decision-Making - FLG thinks his MBA covered this.
Financial Derivatives - Done
Financial Regulation - Done
Game Theory - Done
Global Investment Management - Done, more or less
Global Macro Modeling - Nope, could be very interesting
Industrial Organization - Done
International Money and Banking - Done
Multinational Corporate Finance - Done
Regulation of International Financial Markets - Done
Topics in Growth and Development - Done

Anyway, so FLG was looking through this and thought to himself, "why do you keep thinking you need to learn more?   Maybe a PhD on the topic would allow you to dig deeper into this stuff, but would you even want to dig that deep?  You wanted to be an expert in international economics and finance.  Just admit you're there.  You've pretty much got expert level knowledge in this domain.  Accept it.   Why are you insecure about this?  Do you need another credential?   None of this makes any sense and it's not normal."

Saturday, January 24, 2015


Telling point about FLG.   Obviously, he pays attention to the currency markets and he knew the ECB was expected to announce quantitative easing.    He also knew that this would drive the euro down against the dollar.   FLG's first thought?  Time to order shoes.  160 euros minus VAT is 132 euros.   132 euros is less than a $150.  Full grain leather, goodyear welted shoes for less than $150?   Yeah, gonna take advantage of that.

If the exchange rate stays this low for a bit, FLG might even buy these.

Tuesday, January 20, 2015


Saw David Muir in front of the White House.  FLG is about 75% sure he saw Chris Matthews as well.

Friday, January 16, 2015


FLG saw John Ashcroft this morning and Nouriel Roubini while walking back from lunch.

Thursday, January 15, 2015


Reread Euthyphro last night.

Not FLG's favorite dialogue.  Phaedrus probably is.  Followed closely by Meno, Apology, and Crito. But it reminded FLG why philosophy professors so often assign Euthyphro.  It demonstrates the Socratic Method; it raises a key theological dilemma; and, probably most important for Phil 101 professors, it's short.

Monday, January 5, 2015

Quotes About Finance

FLG ran across this Motley Fool article with 122 Things Everyone Should Know About Investing and the Economy.

Really liked this one regarding investing:
"In expert tennis, 80% of the points are won, while in amateur tennis, 80% are lost. The same is true for wrestling, chess, and investing: Beginners should focus on avoiding mistakes, experts on making great moves."
FLG also liked this one, which applies to finance and economics:
"We're all just guessing, but some of us have fancier math," writes Josh Brown. 

But of all the quotes, FLG like this the best because it applies pretty much to any field of human endeavor:
John Reed once wrote, "When you first start to study a field, it seems like you have to memorize a zillion things. You don't. What you need is to identify the core principles -- generally three to twelve of them -- that govern the field. The million things you thought you had to memorize are simply various combinations of the core principles." Keep that in mind when getting frustrated over complicated financial formulas.  

Sunday, January 4, 2015

Time Horizons: NOW!

FLG read this article with interest because of the obvious overlap with his time horizons theory.

Saturday, January 3, 2015

State Robustness

Nassim Taleb co-authored a piece in Foreign Affairs that articulates a concept that FLG has been thinking about for a long time -- states that appear stable are actually less stable.   Italy, for example, is more adept at absorbing shocks and change than Saudi Arabia.

According to the article, these are the signs of a fragile state:
Centralized power
Economic specialization (ex. tourism or oil)
Being highly indebted and highly leveraged
Lack of moderate levels of political change
Lack of a record of surviving big shock

These five markers function best as warning signals. They cannot indicate with high confidence whether a given country is stable—no methodology can—but they certainly can reveal if a given country should cause worry.

FLG is completely fascinated by the idea of entropy in both economic and political systems.  One could use either of two definitions:
A measure of the disorder or randomness in a closed system.
Inevitable and steady deterioration of a system or society.

The following passage from the article expresses FLG's thoughts on the matter far more concisely than he could on his own:
Although centralization reduces deviations from the norm, making things appear to run more smoothly, it magnifies the consequences of those deviations that do occur. It concentrates turmoil in fewer but more severe episodes, which are disproportionately more harmful than cumulative small variations.
FLG has previously used the idea of pressure in a system to articulate this.  The entropy in any system creates pressure.  Trying to contain the pressure is only a temporary solution.  There needs to be some sort of release valve or the entire system will be destroyed.

This means that a political system, including say central banks trying to manage the economy, that tries to tweak the system over time to preserve or optimize the status quo is deluding itself, as this continual optimization results in a sub-optimal long-term outcome.  The best rebuttal FLG has seen, not surprisingly for long-time readers a time horizons-based one based on Thomas Jefferson -- maybe a series of stable regimes that last for several decades, only to be violently replaced, is actually the best solution.  FLG doesn't agree, but it is a compelling argument.

Thursday, January 1, 2015


FLG enjoyed this review of Leo Strauss: Man of Peace because it reminded him of many of the things he so enjoys about the study of political philosophy.

It also reminded FLG of the part of Phaedrus where writing itself is called into question.  This most often used as the jumping off point for the concept of esoteric philosophical writing.  For FLG it is that, but also a warning about the limits and consequences of technology.  Every once and a while, it's healthy to step back and consider the effects of technology, not just computers, Internet, and smart phones, but to think about one of the most fundamental -- the written word.

I cannot help feeling, Phaedrus, that writing is unfortunately like painting; for the creations of the painter have the attitude of life, and yet if you ask them a question they preserve a solemn silence. And the same may be said of speeches. You would imagine that they had intelligence, but if you want to know anything and put a question to one of them, the speaker always gives one unvarying answer. And when they have been once written down they are tumbled about anywhere among those who may or may not understand them, and know not to whom they should reply, to whom not: and, if they are maltreated or abused, they have no parent to protect them; and they cannot protect or defend themselves. 
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