82,891
edits
The dog in the night time: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary Tags: Mobile edit Mobile web edit |
||
| (4 intermediate revisions by the same user not shown) | |||
| Line 1: | Line 1: | ||
{{a| | {{a|disaster|}}Theme tune: born under a bad sign/crawling kingsnake - [[dangerboy]] | ||
Podcast idea - look at unusual anomalies in the markets and ask why they persist. What are the red-flags that an out and out fraud, pyramid, ponzi scheme is going on? are there some consistent themes? | Podcast idea - look at unusual anomalies in the markets and ask why they persist. What are the red-flags that an out and out fraud, pyramid, ponzi scheme is going on? are there some consistent themes? | ||
The idea is not to look at the progenitors of these crashes, so much as ''the rest of us''. Why did gatekeepers, investors, regulators miss it? Why did our control mechanisms fail? | The idea is not to look at the progenitors of these crashes, so much as ''the rest of us''. Why did gatekeepers, investors, regulators miss it? Why did our control mechanisms fail? | ||
| Line 24: | Line 24: | ||
==Oh come on, Ref== | ==Oh come on, Ref== | ||
*'''Over-reliance on “other adults”''': We imagine regulators/rating agencies are better resourced, more watchful, more powerful, more talented and less human than they are. Examples: | *'''Over-reliance on “other adults”''': We imagine regulators/rating agencies are better resourced, more watchful, more powerful, more talented and less human than they are. Examples: | ||
**SEC on Madoff. | **SEC on Madoff. | ||
**FDA on Theranos. | **FDA on Theranos. | ||
**Moody’s on the GFC | **Moody’s on the GFC | ||
**[[Auditor]]s for [[Enron]] - see also the agency problem. | **[[Auditor]]s for [[Enron]] - see also the agency problem. | ||
**[[BaFin]] on [[WireCard]] | **[[BaFin]] on [[WireCard]] | ||
*'''oversized management committee''': a top heavy management structure with multiple board members whose function is effectively to to diffuse away responsibility rather than accept it, thereby giving cover 2 to micro dictator behaviour. See: {{author|Peter Thiel}} — {{ | *'''oversized management committee''': a top heavy management structure with multiple board members whose function is effectively to to diffuse away responsibility rather than accept it, thereby giving cover 2 to micro dictator behaviour. See: {{author|Peter Thiel}} — {{br|Zero to One}} | ||
*'''Referees with personal skin in the game''': where referees have (wittingly or otherwise) committed personally to the enterprise, and are thus incentivised to find ''another'' explanation that doesn’t make them look bad | *'''Referees with personal skin in the game''': where referees have (wittingly or otherwise) committed personally to the enterprise, and are thus incentivised to find ''another'' explanation that doesn’t make them look bad | ||
:*Regulators on the Savings and Loan scandal | :*Regulators on the Savings and Loan scandal | ||
| Line 76: | Line 76: | ||
**LTCM: reliance on Black Scholes notwithstanding it's failure to manage tail events | **LTCM: reliance on Black Scholes notwithstanding it's failure to manage tail events | ||
**WireCard: BaFin not able to believe that this could be corporate fraud when "mendacious short-selling" by "locust" hedge funds - aided and abetted by, ahh, investigative FT journalists - fit the BaFin's regulatory world view and seemed a better story. | **WireCard: BaFin not able to believe that this could be corporate fraud when "mendacious short-selling" by "locust" hedge funds - aided and abetted by, ahh, investigative FT journalists - fit the BaFin's regulatory world view and seemed a better story. | ||
**Enron: mtm up front realisation of lifetime deal pnl | |||
*'''Sleepy backwater''': It’s a boring and unglamorous part of the operational network. No one’s taking any risks there: [[Barclays Programme Limit]], [[Excess margin]] return in [[Archegos]], [[Libor]], Kerviel, Abodolo. | *'''Sleepy backwater''': It’s a boring and unglamorous part of the operational network. No one’s taking any risks there: [[Barclays Programme Limit]], [[Excess margin]] return in [[Archegos]], [[Libor]], Kerviel, Abodolo. | ||
| Line 96: | Line 97: | ||
*'''Reality distortion field''': Charismatic leader can do no wrong, unusually able to divert attention from potential issues | *'''Reality distortion field''': Charismatic leader can do no wrong, unusually able to divert attention from potential issues | ||
*'''Secrecy''': Insistence on confidentiality not just of unannounced plans but of entire operation. Black box operations. Masking the size of the operation (Madoff) or suggesting it is so secretive that you cannot know it (Theranos) | *'''Secrecy''': Insistence on confidentiality not just of unannounced plans but of entire operation. Black box operations. Masking the size of the operation (Madoff) or suggesting it is so secretive that you cannot know it (Theranos) | ||
*'''It’s the law''': I can’t possibly tell you because of [[General Data Protection Regulation|GPDR]], Health & Safety, potential [[Unpublished price-sensitive information|market abuse]], [[Antitrust|anti-trust]] and so on. | |||
*'''Hostility''': combative/aggressive demeanour to criticism | *'''Hostility''': combative/aggressive demeanour to criticism | ||
*'''This is different how?''': To what extent is “fake it till you make it” bravura, and how much is it confidence in your ability to sort it out later, or big opportunities. Is there a difference? | *'''This is different how?''': To what extent is “fake it till you make it” bravura, and how much is it confidence in your ability to sort it out later, or big opportunities. Is there a difference? | ||
| Line 110: | Line 112: | ||
:*Juniorisation: Specialisation/siloisation/jujniorisation of key risk personnel: miss emergent risks between functions, not understand bigger picture; not understand risks at all. Emphasis of form over substance: [[Playbook]] as a substitute for comprehension. | :*Juniorisation: Specialisation/siloisation/jujniorisation of key risk personnel: miss emergent risks between functions, not understand bigger picture; not understand risks at all. Emphasis of form over substance: [[Playbook]] as a substitute for comprehension. | ||
:*'''Misaligned incentives''': financial reporting as a profit centre (Enron) | :*'''Misaligned incentives''': financial reporting as a profit centre (Enron) | ||
==Well fancy seeing you here== | |||
*[[McKinsey]] and [[McKinsey]] alumni | |||
*[[Ayn Rand]] fanboys | |||
==Correlation risks== | ==Correlation risks== | ||