Rewarding Behavior

I think it’s a general rule that over time people tend to do what they are rewarded to do, often despite finding the behavior initially repulsive. Rewards will find their own justification. So what is being rewarded today? Here’s one answer, from a Zero Hedge post to which I’ve added some snazzy interpretive graphics:Looting

What does this say for the future of society?

Best Amazon Quote Ever

“That’s because Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers.” From Slate: Amazon Profits Fall 45 Percent, Still the Most Amazing Company in the World

Maybe they should start a bank too.

Happy Non-Denominational Holidays!

Best wishes to everyone as you reflect on the presence or absence of whatever deity or deities you deem necessary, in whatever way you see fit, however, barring all acts that are harmful to others, whether they are, including but not limited to, godless heathens, infidels, blasphemers, the unclean, abortion doctors, believers in one of those other obviously ridiculous religions, someone who has sex in ways you find disgusting, a speaker of some other language, a foreigner, or even female.

Remember…

Holiday Rerun – The Assault on Human Variability

This was originally posted in March, barely one month after I started this blog, so hardly anyone saw it. A rebuttal to the redefinition of normal in mental health.

The Assault on Human Variability

Feel free to print it out and flog a school administrator as necessary.

An Ode to Personal Responsibility

Attitudes are a major determinant in achieving success or failure in any endeavor, and attitudes about responsibility for what happens to you are among the most important. Take this short quiz to assess yours.

Whose fault is it if:

  1. Your commingling broker loses your money?
  2. Your spouse takes all of your money and runs?
  3. You do a good job but get fired anyway?
  4. Your family irritates the hell out of you?
  5. You are hiking in the wilds of Alaska and a refrigerator falls from the sky and hits you?

I have no idea what the epistemological answer is to those questions, but the best answer is that it’s in some way your fault in every case. Not because it’s 100% true, or 100% your fault, or even something over which you could ever hope to have control; but because acting as though it could have been your fault will more often lead to success than assuming it couldn’t have been.

If you assume nothing is your fault, you forego any chance of improvement. Things you can control will be overlooked and your life will be a rudderless ship. On the other hand, if you assume you are responsible for everything that happens to you, no opportunities to improve your lot in life will be missed. It doesn’t mean you’ll be able to take advantage of them all, but you’ll always have the chance to try.

All discovery is made by trying to answer something that can’t currently be answered, so in analyzing what is in reality uncontrollable, there is always the possibility of discovering something new. Something which could have been controlled, or that may apply in another situation. Acting as though you have control will also make you feel better, since even the illusion of control has been shown to lower stress levels. [1]

It’s all about considering the possibilities. Is having a heart attack your fault? It might be entirely in your genes, but it’s a question worth considering as you polish off that double bacon cheeseburger before having sex with your mistress. [2]

__________________________________________

[1] Control Your Life, Help Your Heart

Rats Develop ‘Illusion Of Control’: Experience Sculpts Brain Circuitry To Build Resiliency To Stress

[2]  Men who cheat on their wives more likely to die of a heart attack

Who’s Da Man? A Summary of Executive Orders

After reading this piece on Zerohedge about the Obama administration drafting a new Executive Order covering “internet security,” I became curious who was the most prolific in handing down these unilateral edicts. Here are the results (data courtesy of the Federal Register):

President Years Start End Total Per Year
Barack Obama (2009-Present) 4 13489 13623 134 33.5
George W. Bush (2001-2009) 8 13198 13488 290 36.3
William J. Clinton (1993-2001) 8 12834 13197 363 45.4
George Bush (1989-1993) 4 12668 12833 165 41.3
Ronald Reagan (1981-1989) 8 12287 12667 380 47.5
Jimmy Carter (1977-1981) 4 11967 12286 319 79.8
Gerald R. Ford (1974-1977) 3 11798 11966 168 56
Richard Nixon (1969-1974) 5 11452 11797 345 69
Lyndon B. Johnson (1963-1969) 6 11128 11451 323 53.8
John F. Kennedy (1961-1963) 2 10914 11127 213 106.5
Dwight D. Eisenhower (1953-1961) 8 10432 10913 481 60.1
Harry S. Truman (1945-1953) 8 9538 10431 893 111.6
Franklin D. Roosevelt (1933-1945) 12 6071 9537 3466 288.8
Herbert Hoover (1929-1933) 4 5075 6070 995 248.8
Average from 1862 to 1928 67 0 5074 5074 75.7

With Congress granting increasingly unlimited power to the administrative branch there’s clearly a diminished need for executive orders in recent administrations. However, it’s still an administratively inconvenient, and needlessly expensive, process. So, to save the time and money of issuing future orders, I suggest the following for number 13624: “The Office of the President can do, or order to be done, whatever it wants, whenever it wants, wherever it wants, to whomever it wants, and any individuals involved in these acts, whether directly or indirectly, shall not be subject to criminal or civil penalties in any jurisdiction, whether in office or after leaving office.”

Our leaders know what’s best for us, and are doing all they can to achieve that goal, so there’s no point in making them jump through pointless hoops to get it done.

Why We Fight: 21st Century Edition

The US spends an incredible amount of money on defense and security to protect the US way of life, as well as promote liberty and democracy around the world. This brief list contrasts US vs Them, dramatically highlighting why this continuing effort is so vital:

China: China to tighten security ahead of Party congress
US: DHS gears up for civil unrest prior to presidential elections

China: China’s Great Firewall Tests Mysterious Scans On Encrypted Connections
US: Uncle Sam Admits Monitoring You For These 377 Words

China: China: Secret “Black Jails” Hide Severe Rights Abuses
US: U.S. Secret Prison Ships Hold Untold Number of Detainees …

Crazed Gunman: Aurora, Colorado, shooting leaves 12 dead at ‘Dark Knight
US: 168 children killed in drone strikes in Pakistan since start of campaign

It’s something worth considering the next time someone starts the crazy talk about cuts to the military or security budgets. Our freedom isn’t free.

Damn, It Feels Good To Be A…Loser

There is a good post on Abnormal Returns, Rapidly learning the lessons of risk and return, on bear markets as learning opportunities. The subject of learning opportunities got me thinking about all the interviews with traders I’ve read over the years. A theme with many is the often disastrous consequences of starting out early in your trading career with a string of winners. Beginning with a series of winning trades makes it all too easy to conclude you’re a born trading genius because it’s so clearly easy for you. Naturally, rationality then demands you lever up and start making trading history.

The inevitable soon happens and your account is blown up, and maybe even your house and marriage are gone. But if your initial success was long and large enough even that might not stop you. Armed with a Teflon-coated brain from your early success, new knowledge is prevented from intruding on your fantasy and in short order only a few minor tweaks are deemed sufficient to guarantee success. Then the second blow up happens.

I long ago concluded the absolute worst thing that can happen to a trader starting out is an unbroken string of success. In that regard I was very lucky. The first mutual fund I ever bought ended up a $5000 loss. The first individual stock trade I made was a loser. The second futures trade was a loser. Seven of the first eight options trades I ever made were losers. In fact as I see it now the single best trade I ever made was a loss. The largest loss I’ve ever had in fact.

It happened not long after I started trading stock index futures, in the good old days before pint-sized e-mini contracts. Though I would have been horrified to think so, I was executing my version of the forex trading ads, “When properly positioned, $1.57 can become $27,000,000,000 – in two weeks!”  For reasons which now elude me I decided to make a big increase from my usual position size, to roughly $2 million in S&P contracts – on a very modest account…on a Fed day. Of course the market immediately went against me, blew right past my mental stop, and then briefly paused at an inflection point. I felt 90% sure it would turn around and blast off, but then I thought of that 10% chance it could go the other way. The losses would be huge and very hard to come back from, both financially and mentally. After 3 seconds I got on the phone and pulled the plug – right at the low of the day. I lost 20% of my account in 10 minutes, but strangely enough I felt pretty good about it. Despite being blinded by greed and my near certainty it would end up a winning trade, I had done the most important thing: I prevented disaster.

Many are probably thinking how horrible it was that I missed out on such a great trade. If only I had stuck with it! But if I had stayed in that trade I shudder to think how things would have turned out later. That one trade would have been monstrously profitable on my small account, but I also would have been richly rewarded for doing nearly everything wrong [1]. Being over-leveraged, having a hazy trading business plan, not having stop orders in place, ignoring a high risk situation, and best of all really having no f-ing clue what I was doing. At some not too distant point in the future there would have been a blow-up for the ages patiently waiting for me to stumble through the door. Because of that painful loss I was spared that fate, so to me it remains my best trade ever.

The next time you take a loss thank your lucky stars it happened. Celebrate it. You did what you needed to do. Smile, secure in the knowledge that you have been spared the curse of the Teflon brain and been given the chance to learn something very valuable before it’s too late. Over time the returns could well be enormous.

_____________

[1] Insert unflattering comparison to Wall St here.

Inside Information

If you’re one of the tormented souls upset that you didn’t get any information from a Facebook insider, consider yourself lucky. As any short seller can tell you, corporate insiders are the last place you should be getting your information. They are often either lying or have downed so much Kool-Aid they wouldn’t know the company is in trouble until bankruptcy attorneys are fighting in the lobby to get a meeting. Even if the information provided is correct there is still no certainty about the extent to which it’s already reflected in the stock price, and it only takes a rumor or big player’s hunch to move prices enough to dash your dreams of underhanded fortune.

But whatever the advantages of inside information, focusing on the unfairness of access to inside information ignores the obvious. Every trade has a buyer and a seller, each thinking they’re going to come out ahead. If you want to make a trade and you don’t think you know something the person on the other side of the trade doesn’t, you shouldn’t be making the trade. The essence of having an edge is possessing some information, insight, experience, or methodological superiority that allows you to know when buying what the other guy is selling is a good idea, despite him being equally convinced of the opposite.

Information is inherently asymmetric in every transaction and we all try damned hard to keep it that way. When you buy a house do you really think the disclosure statement is telling you every problem the seller knows about the property? Do you tell the seller area rents show he could make 8% a year after tax by renting the place out? Hell no, because it’s your inside information. We all use what we have, and all want to get whatever edge we can while still being able to sleep at night.

We can all hope Josh Brown’s war on the Wall St status quo succeeds, but fair or unfair, right or wrong, love it or hate it, you have to deal with the market as it is right now. Blaming others for your losses leaves no solution other than avoiding the markets entirely. The brutal truth is if you lose money it’s your fault. Period. But this is also the best possible news because your choices are one thing you can change today, all by yourself. So stop worrying about how Wall St is screwing you and work on creating an edge of your own. Just don’t forget to keep it to yourself.

And The Ruling Is…

OK, I admit I felt a twinge of doubt when writing the “honesty” sentence at the end of the That Damn Zuckerberg piece, which I ignored because it read well and I wasn’t going to let some semantic debate over what part of the festering corpse of honesty still prevails in society get in the way of that. However, despite the developing IPO selective information release scandal, I’ve decided not to rescind Zuckerberg’s knighthood, regardless of the outcome of the investigations. Instead, the final paragraph is amended as follows:

There have been a few issues with user numbers and other minutiae but so far this has really been about the most honest, WYSIWYG IPO I can remember. Maybe that’s a very low hurdle but, particularly in an era of rampant fraud, Despite clumsier than usual handling of the wink-wink, nudge-nudge asymmetric IPO information release process, it’s hard for me to find fault with that…no matter how much I want to. So I reluctantly knight you, Sir Mark of Immaturity. Godspeed.

Hey Protester!

Give it up. The battle and war are already over, and in reality never really started. You’ve lost. Protests, riots, videos, tweets, Occupy whatever, and other attempts to change the course of events are doomed to failure. You may even get yourself on a list that you don’t want to be on and a good chance of winning the desaparecido lottery.

Read some ancient history. The 60′s protestors didn’t achieve any lasting change and they had a far more coherent message than your education and attention span will allow. 40 years later their most lasting achievements are some good music and creating an environment that fostered more rapid evolution in STDs. Look at who is in power now: They’re making Nixon look benign by comparison and many came from the generation that was to change the world. The radical protesters were sitting right next to these future members of the elite when they were young and impressionable and did nothing to sway them from a life of crime politics/banking/finance. Face it, the biggest contribution to politics you’re likely to make is the next time someone claims they never inhaled you might be able to provide video evidence to the contrary, thanks to having a smartphone glued to the side of your face.

While the majority of humanity is fundamentally good, they aren’t in charge nor will they ever be [1]. Expecting voting and democracy to improve your life is like expecting to come out ahead picking pockets at a pickpocket convention, because that’s literally what modern democracy is. As Ambrose Bierce said long ago, “an election is nothing more than the advanced auction of stolen goods.” Competing groups of people using the government to steal from each other. That is a zero sum game at best and to the extent a group can gain a temporary advantage, it’s never going to be you.

Beseeching the government to do something and granting more power to do it is always the prescription offered, with people blindly accepting the unstated premise that only good people will ever gain power. Even in your short lives all evidence points to the opposite. Real change will happen when the current ruling elite, through their own short-sighted ignorance, kill the goose that laid the golden egg and cause the entire system to collapse around them. In case you haven’t noticed, they’re doing a frighteningly good job of driving toward the cliff with their feet on the gas without your help.

Don’t waste your time trying to change things through politics and protests. Occupy your own life. It’s the only thing over which you have any control. Don’t rely on the government for anything, keep your head down; take care of yourself, your family and friends. Make a difference in your own small corner of the world and maybe at the end of it all you will have done some real good and lived a rich, full life despite it all.

…Oh, and take all of your money out of the too big to fail banks. TBTF is an excuse for a course of action, not a description of reality.

________________

[1] See Hayek’s chapter on why the worst get on top in The Road to Serfdom

The More You Know…

The more you know, the more you know you don’t know. In that sense the happiest state of affairs is when you are so ignorant you think you know everything. I guess there must be a lot of happy people out there.

Jamie Dimon may no longer be one of them.

That Damn Zuckerberg!

As much as I dislike Facebook and by extension Mark Zuckerberg, he’s making it more and more difficult to keep disliking him. He may be an elitist megalomaniac but his maneuvers to effectively maintain control like a private company while going public are damn near admirable and now, I think this has pushed me over the edge: Zuckerberg’s Hoodie a ‘Mark of Immaturity,’ Analyst Says “…I think he’s got to show them the respect that they deserve because he’s asking them for their money.”

Granted, I think Zuckerberg should give greater consideration to the interests of the Facebook employees hoping to cash in on this bonanza while he’s conducting the dog and pony show, but the new investors? How can anyone respect someone who buys into a company where they will have no control whatsoever, with a CEO who has basically said he doesn’t really care about making money, and that the only reason for the IPO is so insiders can cash out? Why is he showing no respect? Because he can – and the hordes will still scramble to get in – and because you don’t deserve any, morons.

There have been a few issues with user numbers and other minutiae but so far this has really been about the most honest, WYSIWYG IPO I can remember. Maybe that’s a very low hurdle but, particularly in an era of rampant fraud, it’s hard for me to find fault with that…no matter how much I want to. So I reluctantly knight you, Sir Mark of Immaturity. Godspeed.

******UPDATE 05/22/2012********

The final paragraph is amended as follows:

There have been a few issues with user numbers and other minutiae but so far this has really been about the most honest, WYSIWYG IPO I can remember. Maybe that’s a very low hurdle but, particularly in an era of rampant fraud, Despite clumsier than usual handling of the wink-wink, nudge-nudge asymmetric IPO information release process, it’s hard for me to find fault with that…no matter how much I want to. So I reluctantly knight you, Sir Mark of Immaturity. Godspeed.

Scott Thompson, C.E.Oh no!

Great, he lied on his résumé. So have a lot of other people. Fire him, don’t fire him, it really doesn’t matter. Yahoo is a dead man walking either way. The more interesting questions are what it says about:

  • Company hiring practices and the people who hired him throughout his career?
  • The people who supervised him? What criteria did they use to evaluate him?
  • The quality of his work?
  • The effectiveness of corporate governance?
  • The value of a degree? Or credentials generally?
  • The actual composition of the merit in meritocracy?
  • The popularity of meaningless tabloid style news?
  • The real question underlying this story – just how the hell much could we have gotten away with on our resumes if only we’d shown similar “leadership” qualities?

I hope he gets fired. I’m tired of getting confused wondering how a guy from The Kids In The Hall got that job.

The Next Internet Metric

Now that there will soon be phones able to track user eye movements I’ve come up with the best internet user metric yet. Visual Attention Path Onset Reckoning (VAPOR). It is the total visual path in pixels/average pixels per character/unit of time.

It’s far better than clicks, visits or time spent on a site since clicks are easily faked and time doesn’t tell you whether a user was actively engaged or so stoned out of their gourd they haven’t blinked in three days (a big problem with Facebook’s numbers).

Best of all it’s not based on revenue or profits so it will support fantastiginormolicious valuations. Don’t miss this opportunity to fleece more sheep than New Zealand! Contact me now to discuss licensing fees.

 

 

Pseudo Random News and Comment

Nice example of the mental state I was talking about in Part 2 of the Intuitive Trading series. The best trader I have ever known, part II

‘Stock-Picking Robot’ a Fraud, SEC Says. Not really, the more people suckered in, the more accurate the predictions. Aren’t accurate predictions the usual measure of success?

All-White jury pools convict black defendants 16 percent more often than whites. I would have guessed higher.

Depression linked to greater risk of peripheral artery disease. So quit moping around and cheer the f*** up. Seems a bit of a stretch and a very small sample, but might work by depression -> immune system -> altered plaque development.

Scientists find Achilles’ heel in life-threatening malaria parasites. There seem to have been a lot of stories proclaiming major progress on malaria but real world results are still lacking.

Study finds soda consumption increases overall stroke risk. Thankfully diet soda is in the clear.

New stem cell found in the brain

Experiment shows visual cortex in women quiets when viewing porn. Haven’t done any sex science links in a long time so this is long overdue.

What price for a year of life? Cancer specialists offer contradictory advice. How much do you have? Once the cashectomy is done you’re a goner. Testament to the brain’s ability to hold contradictory notions when oncologists say $100,000 is too much when many earn several times that each year.

Silvio Berlusconi: ‘women are exhibitionists’ No hope of procuring the best genetic contribution without advertising. His explanation for the payments to witnesses is classic.

Pentagon Smears USA Today Reporters Investigating … Wait for It … Illegal Pentagon Propaganda Someone is finally complaining.

VIDEO: Murky background to Heywood’s death

Cyber-attack cripples US website covering Bo Xilai scandal Somewhat related to the Pentagon story. Government PR in the 21st century.

China Steps In to Steady Bo’s City

China police ‘knew UK man killed’ No surprise there.

Reflections on “Small Wars” and Military Waste; Four Reasons Congress Wastes Money on Useless Defense Programs The purpose of all government spending is to reward contributors, buy people’s votes with their own money, and solidify the power of the government. The fact that the military spending goes to tactically idiotic programs is totally irrelevant.

Studios lose landmark piracy suit LOL

Hacktivists in the frontline battle for the internet.

Why Booze Makes Some People Belligerent But not easily applied to determine whom to avoid at parties.

TSA Behavioral Detection Statistics Some more predictable results of government spending. This must be stupidity day.

Another rebuttal to Bernanke’s traveling medicine show. Did Bernanke Prevent Another Depression?

Mac OS X invulnerability to malware is a myth, says security firm

Key genes that switch off with aging highlighted as potential targets for anti-aging therapies

Evolution seen in ‘synthetic DNA’ Forget the Terminator robots, it’ll be the critters!

Secret to Life Venn Diagram I’m permanently stuck in the learn to monetize area, compounded by the set of things I want to do being unknown or null. Or maybe I’m just a slow learner.

Airliner’s Close Call Blamed on Pilot’s Texting [VIDEO] Jesus, stupidity is dangerous.

Mothers Are Way More Tech Savvy Than You [STUDY] You thought she didn’t know what you did at that party? Joke is on you junior.

Impaired fasting glucose affects male sexual health. Now that’s motivational.

On the other hand some stupidity can be a good thing.Megaupload Trial May Never Happen, Judge Says

Fixing The Economy

I’ve had enough. The irresistible urge to aggregate rears its ugly head again. Once too often I’ve read or heard someone say “We need to fix the economy.”

The “economy” isn’t a separate entity, lurking like a monster in a nearby forest, only marginally connected to the people in the area. There are only individual human beings, making choices about what to buy, sell, save, destroy, and how best to arrange their affairs to ensure a better future, and the result of all our individual activity is known as “the economy.” Calling for “the economy” to be fixed is nothing but advocating the overruling of our individual choices; forcing us to choose differently, to accept other results than what we intended.

It’s the height of paternalistic arrogance to propose anyone be given such power over the lives of others (and pure foolishness to assume that arrangement would turn out the way you wanted). If you’re concerned about the future of the US focus on the legal and political framework and forget “the economy.” There is nothing a ruling elite would like more than for you to waste your time on something that doesn’t exist.

If you’re only concerned with “fixing the economy” leave me out of it. I’m happy with the choices I’ve made during the downturn, and before. My part isn’t broken.

Pseudo Random News and Comment

Where and When Do Most People Lose Their Phones? [INFOGRAPHIC] Don’t let it be you. The smarter the phone the greater the security risk it creates.

Bo Xilai’s playboy son. The Chinese really are great savers. He’s doing it all on only the $478 a month dad officially makes.

Neil Heywood poisoned by cyanide. If true, that’s so low tech. Can’t be a modern country with that sort of amateurism. I always thought an affair was likely for business reasons. Not sure if this makes it more personal or simply taking care of business.

Gerd Gigerenzer: What Can Economists Know? Via Naked Capitalism. Perfect timing since I just finished my second post on quantitative vs intuitive trading (here, and here) and mentioned the need to write about the scientific support for intuition in decision-making. Even more serendipitously, it’s not the only one today – Why does simply trusting your feelings lead to much better predictions? Which also emphasizes my point about the need for training and experience.

Another Mac trojan detected. The trouble with popularity is it makes you a target. Whether governments or criminals, that’s just too big of an area to leave unexplored.

Residential Remodeling Index increases 3% in February I’ve been puzzled that this index has taken so long to show signs of life. If people can’t sell, remodeling should rise at some point. It would be interesting to compare home improvement big box sales vs permits to get an estimate of how non-permitted activity changes too.

Robert Shiller demonstrating the benefits of historical knowledge. Unfortunately that doesn’t mean you’ll be correct at any particular point in time.

The perils of paying for status. I try to buy mine on sale.

The return of the broken window fallacy. Patents, Copyrights Boost Economy With Jobs, Report Finds I don’t know how someone can publish a study like that with a straight face. The same could be said about almost anything – “White guys boost economy with jobs” – and the numerical “support” would be far greater in that case.

12 predictions by Michael Pettis on China. It’s not pretty.

Now I have great new mental imagery when imagining my memory at work. Memory Foraging: When the Brain Behaves Like a Bee

Cancer care in the U.S. versus Europe: Is more necessarily better? Great piece deconstructing a cancer study. Also the only article I can remember on the health debate that points out the real question is how care will be rationed since all systems involve rationing.

Pseudo Random News and Comment

The official line on Gu Kailai. Now they’re reaching for justification. Similar, or far larger, business dealings could be dug up on any top official’s family members. Probably more of a warning to other party members and their offspring to cool it a little.

Man vs Machine. To a machine it’s all very orderly.

Six rules for dining out. Pretty accurate in my opinion. Especially regarding poorer neighborhoods and Thai vs Vietnamese.

Is it true that left-handed people are smarter than right-handed people? Apparently not statistically. However, if lefties are more likely to have mental retardation doesn’t that mean the rest of the lefty population is smarter? I’d hate to have to lower my opinion of myself.

Growing an economy by growing weed. Desperate times call for desperate measures. This may indicate that if things get bad enough even reason will be tried.

Personality Traits Correlate With Brain Activity. “Other results were more surprising, suggesting an unexpected role in personality for the visual cortex and cerebellum—areas better known for visual processing and movement, respectively.”

Earthquakes Hammer the “Ring of Fire”. If another large one hits Fukushima before those spent fuel rods are moved it’s going to get very ugly. That is very likely to happen.

Reading all the Republican War against Women themed articles all I can think is, misdirect, divide and conquer. Is the party in charge of drone wars on women and children really so morally superior to some patronizing twat of a Republican?

I started to do a post last week that it was beginning to look like Summer. Of 2007. Market Anthropology does the comparison in two charts.

How to make VPNs even more secure. If you need to keep things locked down this is very valuable advice. There are many sources of leakage. .

Spanish is faster than English, but Mandarin is slow.

Tennessee Senate Approves Bill To Warn Students That Hand-Holding Is A ‘Gateway Sexual Activity’ They’re absolutely right. Hand holding leads to kissing, which eventually leads down a very slippery slope into the dark depths of sexual depravity. Hallelujah!

.Blood type A may predispose to some rotavirus infections

Pseudo Random News and Comment

Several on the political turmoil in China:

Chinese media fight scandal fallout The official statements about defending the rule of law are pretty ridiculous since Bo’s ouster was all backroom deals, facilitated by the unfavorable publicity generated by Heywood’s demise.

Surname of Bo Xilai’s wife adds to Chinese mystery The Mrs may have had an escape route. Rumor has it many of the elite have dual papers.

Briton’s Wanderings Led Him to Heart of a Chinese Scandal. “Wanderings” makes it sound random. He obviously tried to gain favor and use it for personal gain, fairly successfully judging by where he lived.

Did China use the internet kill switch? If so there will be some more serious kill switch envy in the US, all in the name of our security of course.

The constant reinvention of memories put to use to cure drug cravings.

Is Facebook making us lonely? No strings attached friendship without the obligation or intimacy it traditionally entailed isn’t worth much.

It apparently takes only 4 minutes to achieve your 15 minutes of fame. A lot of sheep and lemmings are laughing their asses off watching this.

Anxiety boosts odor perception. Maybe that’s why people eat junk funk when stressed – It smells better.

Thieves replacing money mules with prepaid cards. One less risk to be taken cleaning out your bank account.

Does Obama pay less taxes than his secretary? I think the tougher hurdle is whether he pays less taxes than Geithner (Wikipedia lists him as a civil servant. Painfully funny)

Charting the housing market. Zero Hedge so you know it’s not positive.

The thrill of the new in regulations

The evolution of Chinese surnames

Group Selection and Macroeconomics: The Irresistible Urge to Aggregate

A critique of group selection got me thinking. Proponents of both group selection and macroeconomics suffer from the same problem: The inability to understand or imagine the emergence of complex behavior solely from the individual level (or genes within the individual). Both confuse a convenient concept with physical reality, proposing ethereal constructs devoid of any possible physical mechanism of action.

The human mind just isn’t very good at juggling large numbers of elements simultaneously. That limitation prompts mental shortcuts that work well enough in the situations in which the human brain evolved – small groups of people – but can go wildly astray when pushed beyond those limits. When people struggle to conceive of complex relationships they automatically start thinking in aggregates, even giving the aggregates properties possessed by none of the component individuals (the populist conception of the wisdom of crowds is an example). It reduces the processing load but ultimately leaves people stuck in abstraction, unable to understand the underlying mechanisms, and in some cases denying their existence.

The “economy”, the “government”, the “market” and the “military” don’t exist. They aren’t real things you can touch or see or that can knock your car into a ditch, but convenient ways to think about things that are too complex to be readily manipulated in the human mind. But these aggregates are themselves flawed models of the world, upon which further models are built. Much of the confusion in mainstream economic circles is caused by this irresistible urge to aggregate. Whether it’s because of indoctrination or simply from being paid to make models and being unable to do so without aggregating, the result is a quick divorce from reality.

When viewed at an individual level the idea of a slump in demand is preposterous. Everyone on earth, at every point in time, wants something more or different from what they have. Demand is unlimited. If nobody is buying it’s because the current price is too high or what they want simply isn’t for sale (much of what I want falls into that category). At the individual level the only possible effect of any effort to increase the mythical aggregate demand is to induce people to buy things they don’t want, don’t need, or can’t afford – otherwise they already would have bought them. If the point of economic policy is to improve the lives of individuals that result hardly seems conducive.

The “government” can’t do anything unless at least one individual takes action to bring it about. The “military” doesn’t kill anyone, individuals make choices to do so. The “economy” can’t be altered without forcing individuals to do things they didn’t want to do. Keeping those distinctions in mind radically alters prescriptions for change.

Pseudo Random News and Comment

The die is cast by age 3. Undercontrolled temperment at age 3 predicts disordered gambling at age 32. I have to wonder what predicts ordered gambling.

Speculation about Neil Heywood. I generally go with some mixture of all of the above in this kind of thing.

Interesting piece on prejudices. The whole topic of the conscious mind as the great confabulator is one of my favorite areas of cognitive science. I catch my brain in the act occasionally and it’s disturbing to face the evidence that much of what I consider true about my personal history and myself is a convenient narrative fiction to explain what other parts of my brain decided without asking.

Felix Salmon on the mystery of individual bullishness on housing. I really think it’s largely due to listening to their realtors too much. From each month’s reports from the NAR you’d never know housing declined. I’m planning a piece comparing my number crunching to the realtor association’s for one metro market. So far there is more fudge than a good batch of brownies.

Looking at Goldman’s new housing index, I can’t help but think that after a decade of being overbought it probably is going to have to hit the oversold 0 level for a while before it’s over.

Facebook: Big Friend or Big Brother. It curdles my blood just thinking about that timeline thing. Rationally it probably shouldn’t since it is as close to immortality as we can get at the moment, but I guess Monty Python’s How Not To Be Seen sketch had a big impact on me.

If you ever find yourself wondering why the markets slump every time Bernanke implies QE3 is off the table, check out dshort’s latest update to Fed intervention and the markets It’s enough to warm any Austrian’s heart.

.New criteria will cure 25% of autism. Since inflation has been partially cured using the same method I don’t know why they didn’t do this sooner.

Being Happy For No Good Reason

Nobody has ever demonstrated a clear correlation between the circumstances of life and happiness. It’s entirely possible the guy living in the mega-mansion with supermodels using his anatomy as playground equipment is the most miserable person on earth. Though there are certainly circumstances that can prevent happiness, they are much less frequent than people tend to believe. If you aren’t happy in your life it’s far more likely the problem lies within yourself, not in your surroundings and circumstances.

As an example, in the last 15 years I’ve dealt with repeated eye surgeries to prevent blindness, kidney failure, kidney transplant, divorce, employer bankruptcy, multiple broken bones, a subarachnoid hemorrhagic stroke, and the slow death from cancer of both my parents, as well as the usual random craptastrophies of life. Yet for most of that time it’s also been the happiest period of my life.

If you’re in prop trading or alternative medicine that perfect correlation may have you rushing to emulate such an obvious path to happiness, but it’s not quite that simple. The baseline level of each person’s happiness appears to be largely genetically determined. Events, both good and bad, push you away from that level for a while but are quickly adjusted to and soon you’re back where you started. Lottery winners tend to take about 6 months to complete the round trip. Major health problems have more lasting effects on happiness, but less you’d expect and significant mean reversion still takes place within a short period of time.

That doesn’t mean you’re stuck with what your genes have ordained. Looking at an early photo of me (here) it’s pretty clear I wasn’t blessed with the most cheerful genes around, but I’ve stumbled into a few ways to game the system and squeeze more satisfaction and happiness out of life. Here are some to try:

  1. Mindfulness: It’s hard to enjoy anything without paying attention to it, and life is no different. Paying attention to the little things focuses your mind on the present, and in doing so eliminates many of the negative emotions people experience. Guilt and regret concern the past. Anxiety, worry, and doubt concern the future. Spend more time in the present and your default state is bound to improve.
  2. Relationships: Nobody else can make you happy if you can’t be happy by yourself, but being in a loving, sexual relationship definitely greases the skids. Since you unavoidably spend more time with yourself than anyone else, start by being in one with yourself (my ophthalmologists have assured me that wasn’t the cause of my eye problems).
  3. Challenge: When things come too easily it’s hard not to feel bored and purposeless, and spend too much time dwelling on your lot in life. Finding something that uses your abilities to their limits generates a sense of engagement, purpose and satisfaction.
  4. Exercise: A subcategory of challenge but with the added benefits of decreased stress, improved health, increased energy, and better sexual function. Regardless what else is going on in life completing an hour of exercise gives you a feeling of control and capability that is hard to match.
  5. Humor: When you lose the ability to laugh at life you are sunk. I’ve yet to be in a situation where I couldn’t find something to laugh about. Whether telling my dad the last time I saw him that “if I’d known I’d be wiping your ass someday I would have changed my own damn diapers” or simply coming up with a ludicrous restatement of a news story, there’s always some way of looking at things that can lift the spirits of you and those around you. Take a step back and appreciate the ridiculousness of it all.
  6. Variety: New experiences, new ideas, new skills, new people – it really doesn’t matter what you choose. No matter how great today was, if you had to live it every day for the next 10 years it would quickly lose its appeal. A sense of mystery about someone makes them more attractive and it can do the same for how you feel about yourself. Keep yourself guessing a little. Try something new. Act like a child. When is the last time you were on a swing set or monkey-bars, or jumped in a puddle? Of course people will think you look foolish – that stick up their butt impairs proper neural function – but secretly they will be totally jealous.
  7. Practice: Much of your emotional life is the result of habitual patterns of thought. If you find yourself feeling negative, derail that train of thought by taking the opposite side of the argument; point out the fallacious assumptions behind your view. If you do this often enough your mind will tire of being frustrated and streamline the process by not starting down that track in the first place. Have part of your brain become the internal auditor of your self talk. You’ll be surprised what it finds.
  8. Let it happen:. Humans are very poor at predicting how they will feel in future situations, and in predicting what will make them happy. Turning happiness into a struggle, dependent on having X, Y and Z before you can be happy, virtually guarantees you will never find it. Happiness, like every other emotion, evaporates when examined too closely. Opportunities for happiness are everywhere. Don’t try to force it.

Focus on one or two things on the list for a while each day. It’s an impossible goal to be happy all the time, and probably not advisable either. Ups and downs are a necessary part of coping and motivation, but limiting the downs to near your baseline level rather than the darkest reaches of the cellar is definitely achievable.

It’s a limited time offer so [gently] pull that stick out of your butt and get started!

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For further reading:
Happiness: The science behind your smile, Daniel Nettle
Happiness: The Nature and Nurture of Joy and Contentment, David Lykken
The Psychology of Happiness, Michael Argyle
Stumbling On Happiness, Daniel Gilbert

Pseudo Random News and Comment

Bo Xilai officially booted from top party posts and wife arrested on suspicion of murdering British businessman Neil Heywood. As the US continues trampling the rule of law one can only hope an expedited political process like this will be implemented so that we can at least be spared the interminable yet meaningless election campaigns.

More research linking homophobia and unwanted feelings. I still like the penile blood flow studies on this topic the best. This methodology is just too dry and impersonal.

How to do your architecture to get bought for a billion. It’s either amazing or nothing at all, depending on how I read it. This piece claims Facebook was in a panic to buy out a future competitor.

Is it possible to have an asocial network? That is something I might join.

Revisiting whether men and women can be “just friends.” It’s certainly possible, but for many men, whether intentionally or not, female friends are inventory on hand in case they get back-ordered.

Fascinating article: What haven’t we cured cancer yet? (Revisited): Personalized medicine vs evolution. The aging process is probably more homogenous so it may be easier to create a virus that causes immortality than cure “cancer” as a monolithic entity.

Howard Lindzon on what a market top looks like …part 2  I especially like “Tops are generally processes as the paper transfers from the few to the many.”

Best Buy CEO resigns. As much as CEO’s love the demise and troubles of competitors, in reality it’s never a good sign for the future.

FBI: Smart meter hacks likely to spread. It’s been happening for as long as they’ve been around. Since many are for things far more necessary than cable they’re a very tempting target.

The mystery of the flying laptop. NYT tries to make sense of TSA regulations. Good luck with that. Too bad it’s not like real theater where the play will soon be over.

Finding where the smarts is. I think this is overly simplified. Even simple tasks cause large areas of the brain to become active. While brain damage can easily reveal the large-scale features, the subtler details are more difficult to untangle. There is also the issue of how valid tests of general intelligence really are. These results may indicate more about test taking skills than general intelligence – in which case the claims are more believable.

Finding where the smarts isn’t. Don’t forget it could be you.

Oops. Frequent dental X-rays linked to most common brain tumor But damn, you have nice teeth. The TSA scanners are potentially even more dangerous since they aren’t tested and regulated the way medical devices are, so the dose you receive could be quite high.