Market Meltdowns and Black Swans

It has been a real messy time that world economy is going through and with all those cries about the slowing US market pulling down bunch (may be more) of world economies with it.

Inciedentally i couldnt stop myself thinking about the book that i read recently Black Swan by Nicholas Nassim Taleb, It was a very good read and thought provoking. Taleb is one of the few original thinkers that i have come across who leaves a mark on your thoughts. His eloquent arguments that shakes the fundementals of your thinkings especially about those forecasts and rudimentary statistic will leave a strong impression on your thinking process.

He defines Black Swan as a "large-impact, hard-to-predict, and rare event beyond the realm of normal expectations", as the definition implies world is full of surprises that hit you hard in either good or bad way. In simple terms , blackswans are something which people have hardtime predicting and a simple example being wive's anger.

The real interesting part is that nobody would be able to predict (obviously) the occurance of black swans (unless you want to co-relate something that Nastradamus wrote -while he was too drunk), A recent black swan is the global economic meltdown -liquidity crisis , however you would want to call it - which has hit several economies badly, the US real estate boom has been on since from 1996-2006 and nobody warned about the associated sub priming which has been brewing up all those years, atleast those I-KNOW-ALL-ABOUT-ECONOMY types. I am very intrigued to know what happened to that hotshot investment banker who first made the nice presentation about projected incomes from Investments of those securities which were wrapped around sub-prime mortagages, may be he is on the look for the job or could be in caymans island in his own yacht.

Once it became very clear that the meltdown has happened , it became very easy for every body to formulate theories in hindsight and to explain whole anatomy of the subpriming crisis and the world is flooded with those strongly opinionated articles that explain what went wrong. Though we cannot say anything wrong about these post-mortems , after all every body needs to survice, but the fact that phenomenon of such a profoundly complex financial instruments which got wrapped with huge sub priming risks ( in a neatly decorated bouquet, with simple names) and offered at a premium didnt catch the eyes of economic guardians is very surprising.

But whatever may the reason, as Taleb rightly puts we have a strong tendency is formulate theories that explain calamities/catastrophes very clearly in retrospect but our powerful modeling techniques and economic gurus always fail to tell us that something is cooking up which could blow things apart(Any body out there doing Predictive Analytics?), one can argue that it may not be possible to do so given the complexities of the macro economies which are very well tied together after globalisation , but after all its not Tsunami or a Volcanic eruptions, it was those greedy guys who wanted to make good bucks on those who had strong desire to buy a home yet didnt do a math of whether they could repay consistently and those non US global economies around the world who just wanted to dump some money and forget about it.

May be these are the side effects of globalisation and the out comes of capitalistic aspirations which are the prime movers of today's economy.

In the back drop of all of these things, i dont know how may Jerome Kerviels are playing out with billions and how many black swan eggs would be hatched soon. The world is getting to be a more interesting place with lot of things going wrong ,after all - it is the unpredicability and a bit of chaos which adds flavour to our life (As long as we dont lose money on it).

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Tata Nano and the Socio-Economic Divides

It has been mandatory to have an opinion about Tata Nano and those who do not have one have been marked out of touch with the reality.It is really interesting to observe what kind of emotions it has created among diverse sections of the society.

Starting from landowners of Singur who agitate to give up their lands , competeitors like Suzuki, Bajaj, green environmentalists and those who are worried about the additional consumption of petrol and congestion, every body had a say.

This itself is a great marketing victory for Tata's who have raised every body's eye brow's. Either good or bad, every body talks about it , hate about it ....
But as Ratan Tata mention, they are not a philanthropic society and apart from exhibiting laudable social entrepreneurship , it is a pure bold business step of creating a new market for thier product.

Those who create a new market for themselves have the first mover advantage and if the entry barriers are huge they would definitely enjoy the success before the model gets commoditised by the copycats.

It is every business man's dream to identify a new market and go after it and those who have not identified it always find reasons to bad mouth those who are successful, after all it hurts losers ego.

It is going to be interesting to wait and see what kind of impact it is going to create as claimed by Tata.

Will it improve the lifestyles of millions who are clinging on to their two wheelers to Nano?

How the cheap option of mobility will impact those who are driving auto-rickshaws?

Will people use it as a utility vehicle as well?

What kind of impact it will create in the socio economic environs?

Will cities be thronged with too many Nano's?

Will we have more longer queues in the Petrol pumps?

Will it pave way for road 4 wheeler workshops like what we have for two wheeler workshops?

I think we need to wait to get an answer for all of these, till that time lets keep talking which every argumentative indian do with pride.

Is OpenSource a Socialistic realization?

I happened to have had a great weekend(never used to end last year, this year is yet to start) having a real intense time reading Socialistic "The Mother" by Maxim Gorky and digging around lot of open source tools for the architecture that am developing fully based on open source tools.

I couldnt help but to draw parallels between the Open Source movement and Socialistic views which are rather bygone now.

First on the socialistic views, Personally i have never been fascinated by socialistic/communistic

school of thought as i feel ( may be a lot of those who have reaped benefits of capitalistic society)

,it is against the basic ethos of human ego.

Here is why i feel that way.

> We were never born equal

> We were never raised equal

> We were never taught equal

More than all of these, our genetic make up is not equal, and hence the founding philosphy of Socialism of Every thing for every body is destined to be mis appropriate on the very premises of the human nature and on a natural logical comprehension.

Still if a philosphy(Socialism) has caught the minds of so many a people and nations , there should be something in it (which i may learn in the coming days), but on a hindsight , looking at the miserable failures of communist nations and principles , one may easily conclude that it was never designed to suit the survival driven human psyche. May be Sigmund Freud would have had some answers based on the dreams of a collective and cognitive society.

Though my intention was not to do a post-mortem on the socialistic principles, i was very keen to catch the parallels i could see between the open source movement with it.

In two days, i was able to create a framework and realize it with

> MySQL Database

> Hibernate ORM

> Spring Framework

> Tomcat

> Alfresco Content Manager

> Quartz Scheduler

all for free ; given the fact that these are high level api's and these include a lot of sub opensource projects, i was intrigued to understand the motivation behind the open source movement.

It could be any reasons ranging from satisfying personal ego's and technical prowess to a clever business model by an unassuming entrepreneur, but apart from those who drive (Mark Fleury, Rod Thomson types) , what could motivate so many individuals to do this? Is it a balance of the society from the previleged to underprivileged developers? Or are we taking a cycle back to socialistic thoughts through open source movements?

This is where i feel we could draw lines between socialistic and opensource thoughts.

--Both are upset with the fact that high degree of control is with too few people

--Both are destined to improve the standards of the corresponding society that they drive

--Both want to kill the competetive edge of the few and offers scope for broader audience(though O/S fares better here)

But as history has proven , the intrepretation of "free for all" thought is with the implementer (Gorky was very upset with Lenin's implementation of communism , though he was a staunch supporter of bolshevik causes) and time will tell the world about the Open Sources and how open they will remain .

If i could attempt to map the story "The Mother" of Maxim Gorky to OpenSource movement, i could see the opensource promoters to be the frustrated factory workers , who want to take a hit at the establishment and coming up with alternate way of techno-society where the competitive edge is no longer the knowledge of infrastructural artifacts. The game is pushed beyond the basics and is played clearly at the level of using these principles to one's advantage or disadvantage.

Anyhow, i am happy to be creating low-cost or no-cost solution alternatives for the sky cost, properietary alternatives and am thankful to those who invest time and effort on cute softwares like hibernate, mysql , spring , alfresco etc (forgetting licensing for time being) and it must be intresting to understand from Karl Marx on his views of Political economy and Open Source commodity software and long live open-source.

The intresting fact is , people who toil for creating the value to the society in both the cases benefit less (based on probality of revenue distribution) than those who control the momentum and direction of the movement and in this regard , i could see a close resemblance of both movements in terms of realization of the socialistic causes (sometime caustic as well).

Lets dig more on this later... with help from Karl Marx.

Roads

Roads are always fascinating, there are old roads , new roads, bad roads , good roads , superb roads and so on and so forth.

Roads have always casted a fascination on my minds ever since i started long travel by roads on our traditional annual road trip with my inlaws. My father in law being in automobile industry has a passion for longtravels on the road and we have a habit of traveling by roads when ever we get time. So far we have made trips from Jamshedpur to Puri/Konark and Chandigarh to Kullu / Manali (Of course both were on the cars manufactured by the company he is working for ;-) )

Thanks to the wide travels across countries , i have been fascinated by the roads of Singapore which are always clean with the trees on both the sides neatly pruned and the roads of Dubai which sand uses as a playground esp during harsh summer and roads of Cirencester which may have been laid by romans and roads towards my native which i would have used for more than numerable times in last 1o years have never failed to impress me regardless of their poor state but for the fact that they get me to where i belong to.

Roads are impartial to those travel on them and carries equally of good and bad. Lifeful and sometime lifeless. They never bother about the creed and cast of who is travelling on them and just simply dont care.

It must be really an interesting study to analyse the history of roads. To me , roads would have been laid to ease the mobilisation of the goods during the wartime by those who were in power and it looks like romans built a vast network of roads of more than 56k miles looooong back.

Roads are always hated when they are bad and gives you a bumpy ride and are rarely thanked when they give a very smooth one to destination and we cant forget the famous poem by Robert frost which starts like

"Two roads diverged in a yellow wood,

And sorry I could not travel bothAnd be one traveler,

long I stoodAnd looked down one as far as I could

To where it bent in the undergrowth"

Roads have always played a vital role in determining the richness as well as greatness of a culture and have often been downplayed in the history except for few exceptions like Silk Road.

Roads are the first one which gets destroyed by the enemy force which wants to stop an advancement of an enemy troop

I dont know anyother road other than Silk road which would have captivated human imagination like Silk Road, it was infact not a single road but a collection of huge mesh of roads from China to Middle-East and beyond. It must have been really fascinating to have travelled around the silk road and meeting up those merchants/pirates en-route to your destination.

We are all travellers and take some road or other till we die and as Robert Frost depicted beatifully , are always in a diellema to choose which one to travel and which one to travel not to.

Irrespective of whatever your decision may be, roads are always there to take you from a point to point and they are designed just to do that, they dont care where you go to , but simply represent the present moment where you use them to travel , you dont thank roads when ever you cross them , but roads stay in your mind and they are the silent witness of what goes on and who uses them.

Road and Time are similar in certain aspects that they are just there , you just go past them in your own speed towards the future which hits you at 6o mins/hour.

So next time when you travel across a road, just spend a moment or two staring at the road to see whether you could understand anything that the poor road conveys to you, May be its a cry.

Will be back with more on roads later......