It's the scientists to blame!

[johncorrigan]

I heard Robert Harris on Radio 5 today - he was punting his new book called 'the fear index'. I've never read anything by him but it was a fascinating piece. He told the story of how the Americans abandoned a huge Hadron Collider project back in the early 90s leaving lots of Mathematicians and Physicists out of work.

So they went into Wall Street and started creating these algorhythms (I think that's what he called them) and more and more powerful computer systems. He said at one point in the interview that because of these powerful systems on one day last year there were more transactions carried out in the markets than in the whole of the 1960s; and that rather than economists, people working in the City are more likely to be scientists. Anyway if you can manage Richard Bacon you might enjoy it - he wasn't too intrusive. Harris is on briefly before the 3 o'clock news talking about an older book, but it was the stuff after the 3 o'clock news that had me fascinated. I don't know if he's right but he was very persuasive.

http://www.bbc.co.uk/programmes/b0150h5r

[Lateralthinking1]

Thanks for this JC. I have just listened to a bit of it. As you say, Harris argues that the stopping of a hadron collider project risked the loss of productivity from a generation of American physicists. Consequently, they went into the business of financial restructuring with the use of increasingly elaborate computers. The systems, as we have all seen, became unmanageable and unworkable. Somehow, Harris still describes the people involved as "brilliant", several times, and without a hint of irony. I often worry about the ease with which we label others "brilliant". Some may have IQs that virtually defy the laws of gravity. This is often a trait that nature counter-balances with lacunas of the most extraordinary stupidity.

To stick, though, with the algorithms for one moment, those things that are way above any of our heads, you will recall this one. It was decided that there was as much chance of the American housing markets crashing as a giant asteroid hitting the earth. Hence the development of derivatives, the collapse of Lehman Brothers, and the happening of the very last thing that could possibly happen. Perhaps we should be grateful that the American hadron collider wasn't taken forward. What, one wonders, would have been the equivalent consequence. Of course, I know nothing about science. I have consistently been the kind of luddite who has had supposedly irrational concerns about CERN. But when we heard this week that, oh, maybe Einstein was wrong about the speed of light, can anyone be sure what they are doing there? I'd switch the whole thing off. Geneva might be improved a bit if Ferney-Voltaire suddenly flew into the air and fell beside the lake. I'm not at all sure that this is a good enough reason for having confidence in the gamble.

As for, erm, money which is apparently largely theoretical, the story has long been the one of the King's New Clothes. What I have never fully accepted is that we are at the mercy of the markets just as we are with natural phenomena like earthquakes. They might all refer to a financial climate. Surely that is like saying the rabbit in Paul Daniels's hat is in the family Leporidae of the order Lagomorpha. But hold on. I may just be wrong on this point. If more than 70% of shares are being traded between computers, and with hardly any human inputs, then the pcs are indeed our newer meteorological phenomena. Perhaps then we do need another hundred international committees to enjoy regular fine dinners. In a hundred or so years time, they could work out how to deal with this particular global scorching. That is, simply by looking at the evidence, but any old fool could do that.

[johncorrigan]

Lat, one of the most interesting bits was when he said that the traditional investor economists were there for the money but that the Physicists were there for the science. The issue was that they undervalued the risk. The algorithms meant that computer systems talked to each other and transactions were carried out on the world markets without any intevention from humans - silence is the sound of money being made in the 21st century. Quite scary really.

[Lateralthinking1]

Yes, perhaps in order to be viewed as "brilliant", individuals need to show that they are brilliant in two complementary fields. Wherever they are in the world right now, they really need to be found!

[rauschwerk]

Yes, perhaps in order to be viewed as "brilliant", individuals need to show that they are brilliant in two complementary fields. Wherever they are in the world right now, they really need to be found!

It's too late for that, I fear. All these interconnected computers make up a vast machine which even the finest systems engineers could not even begin to analyse. It follows that if things go seriously wrong, no one will understand how to correct the problem. Inspection of the value of my modest shareholding over the past couple of months shows seven variations of nearly 10% of the mean price, which I cannot believe was caused by such violent swings in the fortunes of the company in question. The whole system has begun oscillating and I can't believe that anyone knows how to stop it. I shall read Robert Harris's book with great interest.

[amateur51]

The whole system has begun oscillating and I can't believe that anyone knows how to stop it. I shall read Robert Harris's book with great interest.

Can't we just pull the plugs out?

[rauschwerk]

Can't we just pull the plugs out?

I suppose so, but who would agree to go first?

[Globaltruth]

Don't forget that when the Large Hadron Collider (one has to be sooo careful typing that) started up financial markets promptly went into meltdown - which said fact, and resultant conspiracy theory presumable led Mr. H. down the path of scribing his new bestseller.

He does have a knack of finding what is of interest in the zeitgeist and profiting from it with easy-to-read tomes. (Fatherland - what would have happened if Hitler had won, Enigma - Bletchley Park, Archangel - Stalin lives...)

As for computers - they're everywhere, it's too late and there is so much more to come...

For example

http://www.cs.cmu.edu/afs/cs/project/theo-73/www/index.html

[amateur51]

I suppose so, but who would agree to go first?

In my last workplace we employed a task-orientated Colombian cleaner who would pull the plug out of your computer once it was gone 6pm so's she could start hoovering

I'll see if I can get her contact details