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{{a|devil|{{catbox|newsletter draft}}}}Newsletter crib-notes
====In progress====
*[[Reasons to hope we are in a post truth world]]
*[[Contract and tort as finite and infinite games]]
*[[VAR as a metaphor for litigation]]
*[[Working from home]]
*[[The domestication of law]]
*[[Data modernism]]
*[[ABS field guide]]
*[[System redundancy]]
*[[Legal evolution]]
*[[Party A and Party B]]
*[[A swap as a loan]]
*[[When variation margin attacks]]
====More on averagarianism and customer surveys====
Customer surveys are a kind of self-serving averagarianism. To ask online subscribers "how satisfied are you with the quality of the Times’ journalism” on a five point scale from “extremely satisfied” to “extremely dissatisfied” asks the user to construct some sort of ad hoc blended average of the quality of all the writing in the paper, whereas it inevitably varies between departments, between writers, topics, articles, and even days of the week. And that average reflects the priorities and values of the individual readers, who are not the same. Some might buy the times —and therefore judge it —  for its sports coverage, others for the comment, business, politics or cultural coverage, or any combination. The times, we imagine, already knows which subscribers read which articles, so it is not learning anything useful by asking an artificial question, aggregating what are, effectively, responses to different questions, which users are already answering in the affirmative, anyway, because we should presume they buy the paper for the parts they like, and they like the parts they buy the paper for. 

Nor is there any value in carefully framing questions to drag out specific answers which may play well when presented as a graphic in an investor presentation, but which don't really reflect the customer's real interests or opinions.
===Crisis of confidence in the Western intellectual tradition===
[[Cultural appropriation]] as a backwards way of looking at memetic strength.

Basic sense of shame in the western intelligentsia, when in fact  western intelligentsia has (a) created the tools for all this hand-wringing, such as Marxism, critical theory, which grew directly out of the enlightenment tradition and arguably could not have emerged in any other culture (b) painstakingly documented and recorded and studied the indigenous cultures it was supposedly demolishing, giving them the tools for their present revival (c) facilitated the sharing and cultural transmission of its own intelllectual property — including, by the way, the concept of “intellectual property” enabling incredible advances in the standards of living of people all over the world. The remarkable tolerance for new ideas and acceptance of culture 

===Bowie, bonds and the bloodbath of banking===
Dilemma of banking matching long term liability to short term risks. Making a spread which is the same thing as maintaining a capital buffer comma when your assets cannot go up in value and your liabilities cannot go down. Well evidence in silicon valley bank which locked itself into long-term assets at low interest rates, meaning it had absolutely no upside and significant Downside on them even without credit loss, while it's liabilities were deposits comma being extremely short term, were very sensitive to interest rates and could be withdrawn at the moment's notice. The trick to making the business work is to manage that gap semicolon this as we have seen it's partly a function of treasury competence and partly a function of market confidence petards and black ducks flap around.

This is of course hardly new to silicon valley bank and has been the perennial problem with which banks must wrestle. The classic bank lending activity is a mortgage: collateralized, secured over real estate, but long dated and something the bank must commit to for a long period of time stop banks generally fund these mortgages with short dated instruments such as deposits.

How to manage that risk? Largely, by diversity on both sides of the ledger. Banks would lend at scale to thousands or hundreds of thousands of homeowners and take deposits, x-scale from thousands hundreds of thousands or millions of depositors. The basic play was that such diversity would give the depositors confidence not to all withdrawal their money at once comma and on the asset side would give the bank confidence that not all homeowners would default on them mortgages at once. It became a matter of actual aerial management; Banks new that some part of its deposit base was liable to withdrawal bracket and deposit); and new that some part of its asset base was liable to default. It didn't need to know which part; it could manage actuarily on the assumption that, say, 5% of a mortgage portfolio might default over a given period.

Bank regulators would manage for that risk by requiring banks to hold a level of capital against its mortgage book that more than covered that default rate.

Banks grew more sophisticated, as did bank regulation, and different capital ratios might be applied to different trading and banking books based on this actuarial assessment of the embedded risk.

But how to manage, actuarily, that embedded risk? How, indeed, to know exactly what it was? As long as this risk was buried in the books of the financial institution there were experts who could model the probabilities based on historical defaults of similar mortgages. It's all very quantitative and analytical. Regulators would scrutinize this actuarial model, because it would determine capital calculations, but other than specific equity analysts, it held little interest outside the institution.


In essence what are bank risk analyst would be doing was analysing the incidence of defaults over a given economic cycle and extrapolating from that a likely worst case scenario for defaults on the portfolio within a “liquidity period” — the time it would take the bank to foreclose on its loan get out of its risk position.

The likelihood of default of course varies through the economic cycle: for most of it, secured lending is very safe: known to value ratios traditionally were not often greater than 70 percent, meaning a bank would be covered for its whole claim in every situation except where the property value dropped more than 30%.  and defaults are almost nil. During stressed parts of the cycle (following financial crashes and so on) that default level can rise to five or possibly ten percent of the portfolio. 

This meant that even in a stressed situation the great majority of the portfolio was completely safe. 

But, which 10% was not? Therein the dilemma; therein the problem. Since I don't know which thousand of my 10,000 mortgages will default,<ref>it is a little more complicated than that because collateralized loans almost never recover at a zero value, so that 10% loss might be spread over 30 or 40% of the portfolio, but the principal remains the same for every $10 invested, 9 comes back.</ref> we must apply a capital charge against to ''all'' of them. If only we could know definitively that these 9000 mortgage would not default we could apply a lower capital rating.

Needless to say, obviously impossible: one cannot predict the future.

Banks head to problems then: long-term liabilities that could stretch over several economic cycles and which were hard to quickly liquidate, and which attracted a hefty capital charge despite, in most times, being relatively safe Investments.

Hence the rise of the rating agency: independent Financial experts applying independent models to portfolios and calculating probabilities of default comma from which the rating agencies could derive ratings. Rating methods are of course opaque and in scrutable, but the general idea was that a triple A instrument was unimpeciably safe, and therefore would attract a lower or even zero capital charge) 

The independent private rating agencies gradually became embedded into the US regulatory system such that what mattered comma more than one's internal appreciation of risk, was the rating that could be applied to one's security. Near line back to our mortgage portfolios and say one has a mortgage portfolio of 10,000 properties of which any could, conceivably, default in a given period. Even in a period of extreme stress perhaps 10% would be likely to default no more.

===Music royalties===
This same problem of predictability of future income streams applies in many areas of finance. Credit card receivables, automobile loans, and even songwriting royalties.

Imagine you are an otherworldly, androgynous, boundary pushing British musician from the 1970s. Buy the 1990s you have behind you 25 error defining albums and about catalogue of music which has defined a generation of which the JC proudly declares membership. People still listen to your music and you have a healthy forward flow of royalty income. But it's in determinate, and it's in the future. Cash in hand is so much better than cash you may or may not be paid in a year's time.

==Rokos short primer==
... Punting on interest rates


==Hammer of the gods==
When the lender of last resort is a small guy with a dog. What happened to landsbanki and glitnir

==The great deposit withdrawals==
==Where are grads going==

==Bad apples 2==
Particular the curious recent phenomenon of corporations transmogrify in themselves into moral guardians. 

There once was a time that corporations harboured no illusions that their role on the planet was the comparatively amoral one of generating returns for their shareholders. 

Some kind of mandate drift with slippage over the last 20 years which is seen corporations increasingly anxious to project and signal social and political values. These things do not come from shareholders but are generated in the executive.

This has created at least three kinds of dissonance 

1 it is a kind of judgemental overreach whereby corporations feel entitled to impinge on and evaluate the behaviour of their employees outside the parameters of their professional roles.

2 is an old kind of dissociation of “the corporation” from the actions of its employees ''inside'' their professional roles. This is the bad apple phenomenon where the corporations manage to control themselves not as perpetrator, examples the Wells Fargo false accounting, and more recently J.P. Morgan’s studied horror at the behaviour of its former investment bank chief executive, a man who the organisation recruited, employed and promoted to its highest offices over 30 years.

The third is a dissonance between the public musings of the organisation, particularly in the realms of social justice and ESG, and its actual historical behaviour, which may take in facilitating money laundering, financing terrorism, drugs and and chips, evading tax and assisting clients to evade tax and bracket as per above the food in its own customers on a fairly systematic scale.

===2022===
Machines of Loving Grace - John Markoff
Buckminster Fuller, Marshall McLuhan and Peter Drucker
Whole Earth Catalog

[[Blockchain]] and the [[financialisation]] of everything. How blockchain commits the daycare fallacy - {{author|David Graeber}}’s debt analysis

Superstition → a belief based on a fear of the unknown and faith in magic or luck. Actions based on that belief can lead to ’'malign'' outcomes (e.g. ritual sacrifice) benign/neutral outcomes (touching wood, rubbing David Hume’s toe) or a method for undertaking a task you had to do anyway (putting your cricket pads on in a certain order before batting: you have to put your pads on in ''some'' order and neither is (objectively) worse than the other, so from a rationalist perspective the superstition here has no practical effect on the world at all.

On the other hand, acting out a superstition can have unintended psychosomatic consequences (my confidence my pads went on in the lucky way may trigger for getting into system 2? - no opportunity cost ... )
CF hubris: missing the humility of acknowledging there's something bigger than all of us out there
pascal’s wager → opportunity cost and importance of psychological safety and community consensus (believing God in Salt Lake City) → modern day superstition netting ESG (motivated irrationality = the livelihoods one can make from believing stupid things

Paradigm = system. Explains the multiple paradigms in Kuhn's model ... They are all paradigms - interlocking systems

===2021===
Variation margin as source of systemic risk. Would it not be better to manage margin exposure by declining to trade? Thanks do not provide margin on the upside, so that puts a natural cap on on clients preparedness to transact. Thanks still call margin on the downside reflecting at this is fundamentally a lending business and the use of bilateral contracts banks role and regulation and capital is the primary systemic risk mitigant.

The interplay with netting being a a giveaway: variation margin + netting = worse xposure
The bilateral nature of ISDA being a great misconception

The shitness of netting


'''The power of Ignorance''': The most powerful  response to a contrary idea is to ''ignore'' it.

“we love automation. We can automating complex things”. WRONG QUESTION DUDE.

It's structural questions, its new clauses its new schedules. The complexity is mind bending.”


Big ideas... Your tech needs to make the process better, bit just accelerate or anaesthetise existing process

Contracts and processes as formal and informal structures in systems

Claryllis

Ricky, listen, maybe, maybe death wasn’t the right word, I meant you know, he's still here, Ricky, he 's still here, he still exists in the [[space time continuum]]. The way it works is like when he's ceased to be, he actually turned into a different type of energy — [[space-time continuum]] — and the way the universe up there, the black holes and everything, they wrap around, there’s [[string theory]], that can prove that different things, that he can live here in the [[space-time continuum]], I mean that’s how the universe works, Ricky, black holes and thermodynamics can fold over time space like that so he's actually still, existing.

logical undecidability of libertariaism. John highs example of the right to choose which side of the road to drive on.
*Average being comprised of individuals. There is no magic, no emergence from the average. Just because cour category performs, on average, differently to another category doesn't mean you perform differently to him.
*Categories are as hoc and non-exclusive. The Simpson paradox
*The category error
*That guy
*Opportunity cost

Dear lord and father of mankind is the back end of a poem written during a hallucinogenic trip brought on by drinking Soma in some vedic ritual: https://en.wikisource.org/wiki/The_Brewing_of_Soma

Soma was a sacred ritual drink in Vedic religion, going back to Proto-Indo-Iranian times (ca. 2000 BC), possibly with hallucinogenic properties.


{{modernism versus pragmatism}}

==Psychology in negotiating==
Why you should call call before writing.

If you wanted to persuade someone of a a course of action, wouldn't you you first explain it to them? 

What works better, a pitch or a deck?

Standard operating practice amongst professional negotiators is to proceed almost entirely in written form. There are a few selfish grounds for doing so: firstly it's a bit like pre preparing a performance. You don't need to be perfect, you don't need to react to to expected turns of events, and you have time to prepare the perfect answer.

Calling and debating live requires confidence, preparedness, and a greater command of the technical material over which you are negotiating. This is intimidating . Effective interpersonal communication also requires empathy, psychology and wit: these are are skills one generally acquires with experience and and expertise and they are generally not available from school leavers in Bucharest operating with a PlayBook on their lap.

So negotiators have evolved away of operating which best suits they are degree of skill and experience, and more or less guarantees and ongoing stream of work. The the orderly, leisurely, thorough exchange of correspondence. One can ensure all boxes are ticked, or processes followed, without tension comic conflict unexpected crisis or or risk of inadvertent error.

The cost is is the speed and waste it generates as an a inevitable by-product. The unnecessary trials of correspondence. The waiting, the over detailed drafting as each side tries to unpick the others goal. All of this can be circumvented by direct conversation.

Yes; this means having skilled negotiators and they are expensive. But avoiding that is a false economy.

===Nepotism and networks of trust===
Is nepotism the problem or is it lack of networks of trust? When when the bosses nephew gets that plum job, what is the value in it of the the credibility signal sent by the boss. I vouch for this person full stop my reputation is at stake if he he fails. In recommending him to you I have skin in the game.

By looking at at these arrangements purely from the perspective of unfair advantage and privileged access that they undoubtedly also have, we miss a trick. But it is true that children from lower socioeconomic backgrounds and deprived areas have much less opportunity of this kind. But if these reinforcing social vouching systems have value, and it seems that they do (otherwise privileged would not use them), then is not the answer to look for ways of constructing these vouchers systems amongst children who would otherwise not have them.

Many corporations have relationships with inner-city schools, for example, which run summer internships and similar programs. These are fantastic opportunities to create relationships of trust and recommendation. This is what networks like LinkedIn are basically designed to achieve. But are there other similar systems question mark if not, how could we invent them? Raising levels of trust in a community, however that is done, is clearly of value to the whole community.


==Turtles==
Talking Politics with Adam Curtis

The idea that the truth is in the patterns in the days that human cannot even see.

Money as an abstract token of value that has no intrinsic value

Advertising generates economic production, rather than economic production generating advertising.

=== Authenticity ===
The importance of [[authenticity]]. Why is it not the same when it isn't David gilmour playing that guitar solo? 

The importance of effort. We should not underestimate how we we value the effort required to produce intellectual property. Many years ago go robotics engineers designed a contraction that could play the flight of the bumblebee on classical guitar. Undoubtedly the machine was extremely complex, the programming highly ingenious and it executed the police flawlessly at tempo, undoubtedly more perfectly then the finest classical guitarist could. But would you pay money to sit in a concert hall and watch a robot playing classical guitar? Once the technical problem has been solved and can be inexpensively replicated the value of the performance tends to 0. Even though we can can program robots to flawlessly play, at no cost, we will still pay good money to watch a human virtuoso doing the same thing less well than the machine.

The segues into a conversation about the meaning of value. The same way that meaning does not exist in the words on a page, value does not exist in in the technical performance of a skill, but lies somewhere between the performer and and it's audience. Similarly, science is not simply demarcation of the correct answers to questions, but is demarcation of the correct questions requiring answers. This is a dynamic. It is complex in the technical sense, the ground rules are approximate and shift without warning based on the attitudes of the conversants.

Leaving aside all the overpowering psychological reasons not to value an AI version of Pink Floyd, there is the bluntly practical one.  They can only ever be a flawless moment it can recombine existing elements into a new you form. But it cannot create genuinely new you output because it is not the artist. Whatever the machine comes up with it will not be what nirvana's ''next'' album was going to be. Of course, we cannot know that, but consider an AI algorithm directed at The Beatles first four albums. Is there any chance it could have devised music resembling that on revolver or rubber soul let alone tough White album or sergeant pepper's? An AI analysing Pablo honey and The bends will not produce amnesiac or kid A.

===Allegory, fairy stories and the hubris of taking things literally===
We have been been warning ourselves since the dawn of civilization about the folly of using magic to take shortcuts. If we take {{author|Arthur C. Clarke}} at his word that any sufficiently advanced technology is indistinguishable from magic then are we forgetting our oldest lessons?

{{Critical theory, modernism and the death of objective truth}}



===Power structures are all around us===