Business as usual at J.P. Morgan Chase

Nothing has changed for the better at J.P. Morgan Chase, as described by Matt Taibbi. It's clearly time to break up the big Wall Street banks.

If you can fight through the jargon, what this basically means is that Chase decided to go into the fiction business and invent a new way to value its crazy-ass derivative bets, using, among other things, a computerized model the company designed itself called "P&L predict" which subjectively calculated the value of the entire fund toward the end of every business day. If this all sounds familiar, it's because it's the same story we've heard over and over again in the financial-scandal era, from Enron to WorldCom to Lehman Brothers - when the going gets tough, and huge companies start to lose money, they change their own accounting methodologies to hide their screw-ups, passing the buck over and over again until the mess explodes into the public's lap. The difference is that Chase is a much bigger and more dangerous company to be engaging in this kind of behavior. An even scarier section of the report regards the reaction of the Office of the Comptroller of the Currency, or OCC, the primary government regulator of Chase. The report exposes two huge problems here. One, Chase consistently hid crucial information from the OCC, including the sort of massive increases in risk the OCC was created precisely to monitor. Two, even when the bank didn't hide stuff, the OCC was either too slow or too disinterested to take notice of potential problems.

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Houston pastor announces he is an atheist

This is an article from last year. This TV news feature a Houston Lutheran pastor who no longer believes in God. He indicates that a careful reading of the bible led to his loss of faith. Discussion turns to The Clergy Project, initiated by Daniel Dennett, which claims more than 200 members, all of them current or former church leaders who are atheists.

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Sorry, wrong homework

This is a pretty cool story that has stuck with me. It's from the obituary of George Dantzig (Published in the Washington Post in May, 2005):

George B. Dantzig, 90, a mathematician who devised a formula that revolutionized planning, scheduling, network design and other complex functions integral to modern-day business, industry and government, died May 13 at his home in Palo Alto, Calif. The cause of death, according to his daughter, was complications from diabetes and cardiovascular disease. Dr. Dantzig was known as the father of linear programming and as the inventor of the "simplex method," an algorithm for solving linear programming problems. "He really created the field," said Irvin Lustig, an operations research software consultant who was Dr. Dantzig's student at Stanford University. Dr. Dantzig's seminal work allows the airline industry, for example, to schedule crews and make fleet assignments. It's the tool that shipping companies use to determine how many planes they need and where their delivery trucks should be deployed. The oil industry long has used linear programming in refinery planning, as it determines how much of its raw product should become different grades of gasoline and how much should be used for petroleum-based byproducts. It's used in manufacturing, revenue management, telecommunications, advertising, architecture, circuit design and countless other areas. . . . In 1939, he resumed his studies at the University of California at Berkeley, studying statistics under mathematician Jerzy Neyman. An incident during his first year at Berkeley became a math-world legend. As Dr. Dantzig recalled years later, he arrived late for class one day and saw two problems on the blackboard that he assumed were homework assignments. He copied them down, took them home and solved them after a few days. "The problems seemed to be a little harder to do than usual," he said. On a Sunday morning six weeks later, an excited Neyman banged on his student's front door, eager to tell him that the homework problems he had solved were two of the most famous unsolved problems in statistics. "That was the first inkling I had that there was anything special about them," Dr. Dantzig recalled.

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