Russia, economy, One.

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Ukraine_Putin_heli_2841048b

Western governments are spluttering with indignation following Russia’s invasion of Ukraine’s Crimean peninsula – but in an economically interconnected world, spluttering may be their only response. US President Barack Obama promised “consequences”, and European Union foreign ministers rushed to emergency meetings. “But there’s nothing we can do,” says Keir Giles of Chatham House, an international affairs think-tank based in London.

One might think that the main obstacle to any Western military action is Russia’s size and 1300 nuclear warheads ready to launch. However it is not. In reality, the chief stumbling block to any Western action is the interconnectedness of the global economy. Sevastopol, the Crimean town which is the only port for Russia’s Black Sea fleet, is also vital for grain shipments. Ukraine is the world’s sixth-largest exporter of wheat and fourth-largest of maize, accounting for 18 per cent of the world’s maize exports. Disrupting that with military action or a blockade would destabilise grain prices, causing political unrest worldwide. Wheat and corn prices have already jumped over the current confrontation. (1)

In an interconnected world, there is so little you can do to harm the other without harming your self.

Think about it.
We are all living in the same world.
We are all interconnected.
Harming others means harming our own self.
Loving others means loving us.

In a cosmos old enough, One is the only option.
Is that the answer we have been searching for thousands of years in philosophy?

The command “ἀγαπᾶτε ἀλλήλους” certainly sounds more wise under that perspective…

Economics, predictions, “predictions”…

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Predicting how stock prices will rise or fall, everybody knows, is worth a fortune. Understanding the predictability of stock prices, too, can net you a pretty rich dividend, as Eugene Fama, Lars Peter Hansen, and Robert Schiller can tell you this morning. The three have together won the 2013 Sveriges Riksbank Prize in Economic Sizes in Memory of Alfred Nobel (informally, the Nobel prize in economics) “for their empirical analysis of asset prices”. (1)

Predicting how stocks will behave, so that all investors buy them and – as a result – make them behave differently.

Power to the people! (or… statistics)

Knowledge is NOT power… (or: 知識は力ではありません) :)

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Taro Aso said that bankers in Japan had not been able to understand the complex financial instruments that were the undoing of major global players in the 2008 crisis, so had not bought them.

“Many people fell prey to the dubious products, or so-called subprime loans. Japanese banks were not so much attracted to these products, compared with European banks”, Mr Aso told a seminar in Tokyo.

“Managers of Japanese banks hardly understood English, that’s why they didn’t buy”, he said. [1] (!!!)

Who said knowledge is power?

In this case, LACK OF KNOWLEDGE proved life saving! 😛

> Help translate the Harmonia Philosophica book in 6 new languages and get valuable perks in return! Support the Indiegogo project now!

High Frequency Trading, computers, humans…

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In markets, as in war and medical research and just about everything else, technology tends to impart an advantage.

This is how a single computer program of mysterious origins managed to make up 4 percent of all quote traffic in the U.S. stock market last week while hoarding 10 percent of the bandwidth allowed for trading on any given day.

That’s scary. No one knows where the program came from, what it’s really doing, or why it failed to actually execute a single trade–though there are plenty of theories. None of which is comforting. [1]

Something to think about as the millisecond tick by today: How computers have taken control of our financial world.

This is largely the result of high frequency trading, or HFT, in which computer algorithms are constantly trying to find small price discrepancies for the same stock on different exchanges, which are caused by the fact that so much trading is happening so quickly that each exchange can’t always keep up with the rapidly changing price of any security. If an algorithm can spot a millisecond-level opportunity in which a stock is–for the blink of an eye–worth more on one exchange than another, it can make a quick buck (this is called abitrage, and it’s how HFT turns a profit). [2]

So the underlying value of the stock doesn’t matter – HFT generally just exploits pricing opportunity, and in turn the high volume of trading it produces helps to further create delays in the connections between exchanges, which helps create even more opportunities for abitrage.

Unfair. Illogical.

It can only be human.

Or… computer?