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Garbage in, garbage out trampled by Moore's law

Discussion in 'Intel' started by Robert Myers, Dec 17, 2008.

  1. Robert Myers

    Robert Myers Guest

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  2. Robert Myers

    Robert Myers Guest

    The point is that such error bounds aren't possible, even in theory.
    Everyone's assumptions about how many sigma out their model breaks
    depends on everyone else's assumptions.

    The question is whether very large computers really can be used for
    all but the most trivial and transparent of tasks: animation, say, or
    physics modeling, or gene sequencing. Tasks that are computationally
    intensive but fundamentally simple and repetitive. The Monte Carlo
    simulations of financial engineers look(ed) like an ideal candidate.

    The jury may still be out, but for a long time I've been leaning
    toward, "No, they can't be."

    Robert.
     
    Robert Myers, Dec 17, 2008
    #2
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  3. Robert Myers

    Bernd Paysan Guest

    I don't know how these models look like, but a model that allows even to
    input an "infinite, indefinite, perpetual growth" of some number is already
    broken at the model level. This model must be a non-physical model, i.e. one
    which does not represent reality, and does not care about boundary
    conditions which reality always has.

    Models like that are common, even spice models in digital circuit simulation
    work like that. You can look at a diode model - it has an exponential
    current curve over voltage (plus some resistance and capacitance, and the
    current curve is asymmetric with a much higher threshold in reverse
    direction). In reality, there's a boundary: The current heats the diode, and
    eventually, it melts down, changing everything (after meltdown, there's no
    P/N transition anymore, and therefore no diode, just a resistor). There
    simply is no unlimited exponential growth.

    Furthermore, in reality, noise plays an important role. Electric noise in a
    diode just as well as random changes in supply and demand of real goods
    (like houses). If your model comes without noise, it can only simulate
    stable conditions, where noise will just return to the original state. You
    then must find out the phase margin of your simulation, and predict a noise
    magnitude, to see if your system really is stable.
     
    Bernd Paysan, Dec 17, 2008
    #3
  4. Hence the winky-smiley. Still, I wonder whether there's any correlation
    between present financial difficulty and wildness of the "financial"
    models being relied-upon, among the denizens of Wall St?
    Luckily there's plenty of interesting problems that fit into those
    categories (trivial and transparent) to keep the computers busy. Of
    course, there's also a bunch of interesting computation that uses integer
    and other exact arithmetics that have no trouble being as elaborate as
    you please. Not usually on such a scale, I suppose (databases and
    communication and web and so on).
    That may be so, but (a) can it be legislated that way and (b) if not,
    wouldn't you still put your retirement money with the guy who's models/
    predictions/gut-hunches are working out the best? When it's the only
    game in town...

    Cheers,
     
    Andrew Reilly, Dec 17, 2008
    #4
  5. re:
    http://www.garlic.com/~lynn/2008s.html#23 Garbage in, garbage out trampled by Moore's law

    GAO has been doing database of increasing numbers of financial
    restatements of public companies (in spite of SOX). Basically
    executives fiddle statements in order to increase bonuses. Later
    statements may be restated, but executives don't forfeit bonuses. One of
    the worst examples was freddie was fined $400m in 2004 for $10b
    statement fiddling/inflation and the CEO replaced ... but allowed to
    keep tens (hundred?) of millions. an earlier GAO reference:
    http://www.gao.gov/cgi-bin/getrpt?GAO-03-138
    2006 GAO reference:
    http://www.gao.gov/new.items/d06678.pdf

    post from earlier this year (with several additional references)
    http://www.garlic.com/~lynn/2008f.html#96

    with respect to rating agencies giving triple-A ratings to toxic CDOs,
    supposedly SOX required SEC to do something with respect to the rating
    agencies ... but there doesn't seem to have been anything besides a
    Jan2003 report.

    Report on the Role and Function of Credit Rating Agencies in the
    Operation of the Securities Markets; As Required by Section 702(b) of
    the Sarbanes-Oxley Act of 2002
    http://www.sec.gov/news/studies/credratingreport0103.pdf

    another reference:
    http://www.garlic.com/~lynn/2008s.html#5
    and some related items:
    http://www.garlic.com/~lynn/2008s.html#9

    I would claim that regulation of the financial infrastructure and
    insider anti-fraud processes are closely related. this recent post
    mentions an early 80s court case involving (silicon valley, computer)
    industrial espionage ... and the court effectively required
    demonstrating that anti-theft/anti-fraud processes (which were
    proportional to the value of the information, in the particular
    situation, a couple billion dollars) had to be in place
    http://www.garlic.com/~lynn/2008s.html#5 Greed - If greed was the cause of the global meltdown then why does the biz community appoint those who so easily succumb to its temptations?

    in the above post, i mentioned that in a 2004 european financial
    executive conference, i claimed that SOX was in large part window
    dressing.

    the analogy (in the industrial espionage court case) was akin to
    requiring fences around swimming pools since minors can't be held
    responsible for going swimming. given sufficient temptation ... the
    court basically assumed everybody would steal something valuable
    .... unless there were countermeasures.

    Asking why financial regulation is needed is possibly on par with
    wondering why banks might use vaults to keep money. The court (in the
    particular case from the early 80s claiming billions in damages)
    .... bascially wanted, in additon to showing that the information had
    been stolen (and used so that there was resulting damages), proof that
    there had been anti-theft processes in place (and considered adequate to
    protect something worth billions of dollars, aka "security proportional
    to risk").
     
    Anne & Lynn Wheeler, Dec 18, 2008
    #5
  6. re:
    http://www.garlic.com/~lynn/2008s.html#23 Garbage in, garbage out trampled by Moore's law
    http://www.garlic.com/~lynn/2008s.html#24 Garbage in, garbage out trampled by Moore's law

    and for more of the view requiring regulation:

    Corporate Fraud and Misconduct Risks Driven by Pressure to do
    'Whatever It Takes'; Fewer episodes reported by companies with ethics
    and compliance programs
    http://www.financetech.com/news/showArticle.jhtml?articleID=212501185

    from above:

    Of more than 5,000 U.S. workers polled this summer, 74 percent said
    they had personally observed misconduct within their organizations
    during the prior 12 months, unchanged from the level reported by KPMG
    survey respondents in 2005. Roughly half (46 percent) of respondents
    reported that what they observed "could cause a significant loss of
    public trust if discovered," a figure that rises to 60 percent among
    employees working in the banking and finance industry.

    .... snip ...
     
    Anne & Lynn Wheeler, Dec 19, 2008
    #6
  7. Robert Myers

    Robert Myers Guest

    Perhaps the computers and the PhD's in economics are nothing more than
    window dressing, or perhaps even worse: a cover for garden-variety
    fraud.

    Robert.
     
    Robert Myers, Dec 19, 2008
    #7
  8. re:
    http://www.garlic.com/~lynn/2008s.html#23 Garbage in, garbage out trampled by Moore's law
    http://www.garlic.com/~lynn/2008s.html#24 Garbage in, garbage out trampled by Moore's law
    http://www.garlic.com/~lynn/2008s.html#27 Garbage in, garbage out trampled by Moore's law

    there is the old line about asking crooks why they rob banks ... and the
    answer is: that is where the money is. if overall number is 46% ("could
    cause a significant loss of public trust if discovered") and number for
    financial is 60%, then the non-financial industry number should be
    someplace under 40% ... making financial industry at least 50% worse
    than other industries.

    recent/similar thread in some linkedin discussions ... where i commented
    that SOX (sarbanes-oxley passed in the wake of enron & worldcom) was
    more like "window dressing" & some amount of the input fiddling was
    a case of "garbage in, garbage out":
    http://www.garlic.com/~lynn/2008s.html#9 Blind-sided, again, Why?

    as implied in the reference to the (silicon valley, computer related)
    industrial espionage litigation from early 80s, the assumption is that
    everybody is a crook (given sufficient temptation) and countermeasures
    are required that are proportional to risk (and/or proportional to
    temptation).
     
    Anne & Lynn Wheeler, Dec 19, 2008
    #8
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