Laws of Demand

And here's Calvin explaining it eloquently!

Do you take rational decisions?

Here's an interesting article by David Brooks that talks about that question (as applied to the current economic environment)

"In this new body of thought, you get a very different picture of human nature. Reason is not like a rider atop a horse. Instead, each person’s mind contains a panoply of instincts, strategies, intuitions, emotions, memories and habits, which vie for supremacy. An irregular, idiosyncratic and largely unconscious process determines which of these internal players gets to control behavior at any instant. Context — which stimulus triggers which response — matters a lot."

VaR

Here's an excellent article by Joe Nocera on the role Value at Risk (VaR) played in the current financial crisis. It is like a story on VaR.

"In peacetime, you think about other people’s intentions. In wartime, only their capabilities matter. VaR is a peacetime statistic.

The big problem was that it turned out that VaR could be gamed....To motivate managers, the banks began to compensate them not just for making big profits but also for making profits with low risks. That sounds good in principle, but managers began to manipulate the VaR by loading up on what Guldimann calls “asymmetric risk positions.” These are products or contracts that, in general, generate small gains and very rarely have losses. But when they do have losses, they are huge. These positions made a manager’s VaR look good because VaR ignored the slim likelihood of giant losses, which could only come about in the event of a true catastrophe."

Satyam Scandal

Here's a pretty comprehensive article that appeared on Knowledge@Wharton on Satyam

My Genome, My Self - NYT Article

Here's Steven Pinker's article that appeared in the NYT on Personal genomics. And here's a direct-to-consumer company that interprets you genetic information for about $100.

And below are some interesting excerpts from the article

"The very fact that I had to think so hard brought home what scholars of autobiography and memoir have long recognized. None of us know what made us what we are, and when we have to say something, we make up a good story.

An obvious candidate for the real answer is that we are shaped by our genes in ways that none of us can directly know. Of course genes can’t pull the levers of our behavior directly. But they affect the wiring and workings of the brain, and the brain is the seat of our drives, temperaments and patterns of thought. Each of us is dealt a unique hand of tastes and aptitudes, like curiosity, ambition, empathy, a thirst for novelty or for security, a comfort level with the social or the mechanical or the abstract. Some opportunities we come across click with our constitutions and set us along a path in life.

This genetic roulette must be even more significant in an organism as complex as a human, and it tells us that the two traditional shapers of a person, nature and nurture, must be augmented by a third one, brute chance.

Direct-to-consumer companies are sometimes accused of peddling “recreational genetics,” and there’s no denying the horoscopelike fascination of learning about genes that predict your traits. Who wouldn’t be flattered to learn that he has two genes associated with higher I.Q. and one linked to a taste for novelty?

It is a question of the most perspicuous level of analysis at which to understand a complex phenomenon. You can’t understand the stock market by studying a single trader, or a movie by putting a DVD under a microscope.The fallacy is not in thinking that the entire genome matters, but in thinking that an individual gene will matter, at least in a way that is large and intelligible enough for us to care about."

The social logic of Ivy League admissions

Here's a very interesting article by Malcolm Gladwell on some surreptitious history in Ivy league admissions

A culture of enough

Here's a good article by Rohini Nilekani that appeared on Live Mint.

How fast do you type?

Here's a way to find out

Lost in the Crowd

Here's David Brooks on Malcolm Galdwell's new book "Outliers"
"Control of attention is the ultimate individual power. People who can do that are not prisoners of the stimuli around them. They can choose from the patterns in the world and lengthen their time horizons. This individual power leads to others. It leads to self-control, the ability to formulate strategies in order to resist impulses."

Economist Video

Here's a very nice video from The Economist on money markets.

There are several other good videos on a variety of other topics

Responsibility as the best response?

Here's an article by Ramesh Ramanathan that appeared on Livemint
"We ask for a tough state, when we ourselves are a soft people. I mean it in the harshest sense: Most of us are selfish, inward-looking cowards who quaver at the slightest hint of risk to ourselves or our family."

Valid but uncomfortable questions...

Here's an editorial in the New York times.
"How can their government have ignored the warning signs? A 2007 report to Parliament warned that the country’s shores were poorly protected — and some or all of the attackers arrived by boat. Why weren’t the police and the army better prepared to respond? Sharpshooters outside the Taj Mahal Palace & Tower Hotel did not have telescopic sights, so they could not get off a shot for fear of killing hostages rather than the terrorists."

Here's an article that appeared in the WSJ on this topic
"The country's antiterrorism effort is reactive and episodic rather than proactive and sustained. Its public discourse on Islam oscillates between crude, anti-Muslim bigotry and mindless sympathy for largely unjustified Muslim grievance-mongering. Its failure to either charm or cow its Islamist-friendly neighbors -- Pakistan and Bangladesh -- reveals a limited grasp of statecraft.

Nonetheless, the reflexive Indian response to most every act of terrorism is to apportion blame rather than to seek a solution that will prevent, or at least minimize, its recurrence."

Here's an interesting article on LeT by Steve Coll of the New Yorker
"I was at a conference this morning where another panelist well-versed in these issues said he would not be surprised if it turned out that Lashkar conceived the Mumbai attacks as a way to pull Pakistani Army units and attention away from the Afghan border and into defense positions in the east, to protect the country from the possibility of military retaliation by India. In any event, if the evidence does show that uncontrolled Lashkar elements carried out the attacks, it would force India’s government to judge how to calibrate policy toward a civilian-led Pakistan government and Army command that may have little control over the very same Islamist groups that it purposefully built up and supported just a few years ago."

Perhaps, it is time to look inwards, acknowledge flaws and start developing capabilities that enhance our national security instead blaming a bad neighborhood, which grapples with its own incompetence!

Anatomy of the Meltdown

Here's an very nice New Yorker article that talks about Ben Bernanke and the financial meltdown.

And here and here are some excellent articles that gives an overview of the financial crisis. I found the links to these ariticles in Greg Mankiw's blog

Spiderman and a Chopper

Here's a way to fight the liquidity crisis!

And here's a way to kill time!

Articles on Monetary Policy

Here's an article that appeared on Livemint that provides a very nice overview of Monetary policy - from an Indian perspective

And here's an article from The Economist on the same topic.

My battles with cell phones

Cellphones are wonderful gadgets, but I perpetually seem to have problems with the instruments. Here’s an account of my close encounters with the darn machines.

The first cellphone I owned was a brick. It was a hardened rock in every sense – it could withstand damage even if you dropped if from two floors above and, at the same time, not pick a iota of signal at any point. But it was one of those handy devices with which one felt truly safe. I knew I could cause some serious damage to someone, if needed, even if I couldn’t call the emergency lines. I proudly carried around my weapon of choice.

Then I started to get seduced into the world sleek machines. I got my first flip-phone. It’s wasn’t the most extravagant looking flip, but it certainly a step above the brick in the evolutionary ladder. I flipped hard, flipped often and flipped like a trigger-happy cowboy. And then it flipped. I was left with two pieces – the base on one hand and the display on the other. I reverted back to the days of the yore as I used the base to dial and used my hands-free talk. Unfortunately this wonderful tag-team couldn’t handle the missed call culture. Out of sheer pity for the flip, and possibly practicality, I decided to rest the headless communicator.

Then came along the razor. It was cool, trendy and was the then latest and greatest communicating device in history. But razors do become quiet blunt if you bury them under the sand – and it doesn’t matter if you didn’t do it on purpose. It was a two faced machine - a sleek machine outside but a dusty bowl inside. However, it continued to work like a charm until it finally bamboozled me by spinning off my pocket and taking a journey on its own in a city cab.

Thus I woefully entered the world of borrowed communicators. There was the flip that had to be perpetually on life support – remove it from the outlet and the energy drained the next instant. It was a land-line masquerading like a cell-phone. Then there were the brick and the slider that were promptly recalled by their rightful owners. Finally, came along another razor that had numbers hidden in secret places and a voicemail that talked to me! Works well if you get used to it!

Distressed by these maniacal machines, and with the strong intent of staying away from the egoistical machine that proclaims itself as “I” the phone, I signed up with a sleek slider. It was quite reliable until I got ambitious and abruptly moved to the wondrous world of blackberries. But then I quickly learnt a hard lesson. Blackberries don’t go well with milk and cereals. As healthy as it may sound, strawberries are always a better option. This dark colored berry merely hissed in disapproval and has been resting peacefully since. The scorned slider, at that point, conveniently discovered a manufacturing defect and went on an indefinite strike. That's a slider scorned for you!

And that leaves me searching for a reliable machine to voice out my profound messages to the world. I truly yearn for the days of post-cards, smoke signals, and messenger pegions. Kabootar (a)jaa (a)jaa, indeed!

Indecision 2008

The US Presidential elections are in two days. It has been a very interesting campaign for the last several months. I have been following it a little too keenly and people who know me also know that I am a strong supporter of Barack Obama - not that it matters for I don't have right to vote.

However, even as I support him, I do acknowledge, there are inherent risks in voting for Obama. It is not as much as he is an unknown entity as it is about the highly probable gulf that exists between what he believes and what he can actually do. We have seen him give thoughtful answers to complex problems but will the lack of his executive experience affect his ability to execute them? He has shown the ability to attract some exceptionally talented people around him, but will their opinion matter in a possible liberal era of a democrat congress and democrat senate? These are legitimate concerns, but no one, including Obama, can really answer these questions convincingly.

While the way he carried himself through a grueling twenty month campaign under intense scrutiny does assuage some concerns, I do believe that the possible Obama administration is likely to have surprises that not all people will like!

And here's a very nice editorial from The Economist on this topic.

Decision Making

Here's a good article on Decision Making by David Brooks
"....our tendency to see data that confirm our prejudices more vividly than data that contradict them; our tendency to overvalue recent events when anticipating future possibilities; our tendency to spin concurring facts into a single causal narrative; our tendency to applaud our own supposed skill in circumstances when we’ve actually benefited from dumb luck."

Great Articles

Here's an article about Obama by a noted conservative commentator, David Brooks.
"There has never been a moment when, at least in public, he seems gripped by inner turmoil. It’s not willpower or self-discipline he shows as much as an organized unconscious. Through some deep, bottom-up process, he has developed strategies for equanimity, and now he’s become a homeostasis machine"

And here's an article by Suresh Menon on Tendulkar after his test record.
"As remarkable as his record is his self-possession. His head hasn't changed size, his boots haven't grown smaller. He alone knows what it means to be Tendulkar, with its frustrations, its sacrifices, and the need to be Tendulkar at all times. He is a one-man university that teaches sportsmen how to handle money, fame and pressure."

The Real Great Depression

Here's an excellent article that talks about the real great depression that has strong [and scary] parallels to the current economic crisis.