Why is finance so complex? (2011) • Hacker News Board

Re: Why is finance so complex? (2011)

#141

Post by jaawn » Wed, Jul 08, 2015, 6:40 PM UTC

dabeeeenster wrote: post #102

h8trswana8 wrote: post #14

The world of finance makes these aspects of your life function: * Allows you to get a mortgage * Allows you to protect yourself with health/car/life/home/title/etc insurance * Pays for your highways/stadiums/schools and other public works * Protects your deposits * Pays for your retirement * Funds the college fund that paid for your school * ... Or the student loans that allowed you to attend school * Supports the gl…

All these things were available 50 years ago.

Exactly. The adjective "innovative" has an inherent timeframe associated with it. I don't think we can consider mortgages "innovative" in 2015.

Re: Why is finance so complex? (2011)

#142

Post by jaawn » Wed, Jul 08, 2015, 6:55 PM UTC

iolothebard wrote: post #113

hiram112 wrote: post #59

FWIW, I'm relatively quick, pick up languages (both CS and natural), frameworks, algorithms, etc. without much trouble. But I've tried again and again to understand how our basic Federal Reserve System functions - Gov't debt, banks, reserve margins, mortgage loans, etc. etc. I've NEVER gotten a basic "THIS IS HOW IT WORKS in 21 DAYS", Stack Exchange-type-answer. Lots of opinions... This itself leads me to believe tha…

Lmao, can't understand it so it's corrupt. Sounds like all the people that think the same about IT. It's "magic". Buy and read some books, it's laid out pretty clearly. If you're not sure what to read, email some of the professors in finance at the University you went to.

If you think you understand the truly complex parts of finance, I would encourage you to re-evaluate. The world economy is still in turmoil and slow recovery because a huge amount of the experts didn't even properly understand the "innovative finance" they were using in 2008.

I don't understand it, and I have seen countless interviews and articles from respected economists who say there are financial products they don't totally understand either.

To "understand" something in finance is not quite the same as other disciplines. You can understand all the pieces and all the rules of something, but not truly "understand" it entirely. Economics involves a lot of sociology/psychology and difficult-to-predict human behavior. It is likely that no one is completely aware of all of these factors when it comes to any given financial instrument.

So, I don't think you should be laughing at someone and telling them to read books as if this is algebra or something.

Re: Why is finance so complex? (2011)

#143

Post by jaawn » Wed, Jul 08, 2015, 7:01 PM UTC

tedunangst wrote: post #115

hiram112 wrote: post #59

FWIW, I'm relatively quick, pick up languages (both CS and natural), frameworks, algorithms, etc. without much trouble. But I've tried again and again to understand how our basic Federal Reserve System functions - Gov't debt, banks, reserve margins, mortgage loans, etc. etc. I've NEVER gotten a basic "THIS IS HOW IT WORKS in 21 DAYS", Stack Exchange-type-answer. Lots of opinions... This itself leads me to believe tha…

Stop quoting lies. http://www.monticello.org/site/jefferson/private-banks-quota...

It may be inaccurate, but it is hardly "lies." It is clear from the other verifiable quotations on your link that Thomas Jefferson would probably agree with the misquote anyway.

Re: Why is finance so complex? (2011)

#144

Post by [deleted] » Wed, Jul 08, 2015, 8:07 PM UTC

retube wrote: post #87

innguest wrote: post #67

Earlier quoted context omitted.

The size of the global derivatives market is 1.5 quadrillion dollars. Global GDP is not even $90 trillion. 90,000,000,000,000 GWP 1,500,000,000,000,000 global derivatives Do you think it got that far by "sitting"? It gets reinvested ad infinitum.

> The size of the global derivatives market is 1.5 quadrillion dollars No. No it is not. No 1,000,000,000 times. NOTIONAL DOES NOT EQUAL MARKET VALUE. It's also completely meaningless as most trades offset. Trades are rarely torn up, you just do a new one to offset your risk. E.g GS vs JPM: they probably have 100bn of notional with each other. Actual risk? very little as the vast majority of trades just offset. Curre…

[deleted]

Re: Why is finance so complex? (2011)

#145

Post by sdenton4 » Thu, Jul 09, 2015, 2:16 AM UTC

rlonstein wrote: post #130

sdenton4 wrote: post #82

Earlier quoted context omitted.

Eh, I lived in a 400sq foot dome for four years. Always with a room-mate, sometimes with two. It was great. The bit of space between the couch and the wall just becomes some oddly-shaped storage space. Sometimes people would carve their own dome-fitting bookshelves in the wood shop. There were fourteen of these domes, run as a cooperative, on three acres of land. The loans on building them were paid off in full by th…

> Cooperative ownership is fantastic, and a great cure > for the ails of capitalism. +$0.02. I served several years on a housing co-op board for a 156 unit urban high-rise (including as treasurer) and cooperative ownership is itself not a cure all, only the composition of the "ownership" is different. The shareholders (tenants) pool their investment, true, and then go on to create a corporate structure, elect a board…

It's totally possible to do at smaller scale; I've known of some micro co-ops of just one or two houses that have been quite successful. The smaller scale minimizes certain kinds of headaches..

Re: Why is finance so complex? (2011)

#146

Post by Spooky23 » Thu, Jul 09, 2015, 2:35 AM UTC

vasilipupkin wrote: post #111

Spooky23 wrote: post #17

Earlier quoted context omitted.

All of these were done 25, 50, or 100 years ago. The basis for the mortgage industry as we know it was developed during the new deal. I need some serious convincing that the effects securitization of everything has been a net win. The markets for most of this stuff are made or directly supported by the Federal government.

securitization is just the process of transferring risk from those who think they can't hold it to those who think they are very good at holding it. It is a tool, and it is a very good tool. A shovel is a tool and if I take a shovel and kill someone with it, that doesn't make the tool itsel bad

I didn't say it was bad, just not particularly useful in proportion to the other effects.

Re: Why is finance so complex? (2011)

#147

Post by iolothebard » Fri, Jul 10, 2015, 8:01 PM UTC

jaawn wrote: post #142

iolothebard wrote: post #113

Earlier quoted context omitted.

Lmao, can't understand it so it's corrupt. Sounds like all the people that think the same about IT. It's "magic". Buy and read some books, it's laid out pretty clearly. If you're not sure what to read, email some of the professors in finance at the University you went to.

If you think you understand the truly complex parts of finance, I would encourage you to re-evaluate. The world economy is still in turmoil and slow recovery because a huge amount of the experts didn't even properly understand the "innovative finance" they were using in 2008. I don't understand it, and I have seen countless interviews and articles from respected economists who say there are financial products they do…

I understand the parts I've worked in. No one likely has a clear understanding of 100% of finance (this actually crosses finance, accounting and economics, as well as statistics, programming and many other disciplines).

I have degrees in Finance and Economics, I'm a software engineer and my first job was as an Auditor for Andersen, so yeah, I've got a bit of a back ground in the "complex parts" of finance.

All it is for the most part is a fucking shell game FYI with different entities jumping through different nonsensical made up loopholes in tax law, financial regulations and anything else they can do to game the system.

Lots of people understood the "innovative finance" in 2008 and prior. For every stupid bet, there's someone on the other side. In fact, the reason we saw almost no finance people go to prison while the government gave billions, shows they know it far better than you give them credit.

You're right, reading a book about it is beyond most people. You have to actually pay attention as well.

Re: Why is finance so complex? (2011)

#148

Post by iolothebard » Fri, Jul 10, 2015, 8:04 PM UTC

Sone7 wrote: post #116

iolothebard wrote: post #113

Earlier quoted context omitted.

Lmao, can't understand it so it's corrupt. Sounds like all the people that think the same about IT. It's "magic". Buy and read some books, it's laid out pretty clearly. If you're not sure what to read, email some of the professors in finance at the University you went to.

I'm curious what makes you so sure you really understand it? It seems to me that when wealth is being concentrated more and more into the hands of the wealthiest all over the world, there is something deeply wrong with the financial industry and its textbooks.

Lol, degrees in finance and econ. Years of working in the industry as well. Why do you think people in finance aren't the ones being eaten up by increasing productivity and stagnant wages?

I got out of the field because I thought IT would be more rewarding. If I had it to do over again, I'd be one of those finance assholes ripping everyone off and laughing all the way to the bank.