Santayana, Deja Vu

Goldman Sachs is at it again. Having bled the housing market, and the rest of the economy, to a near death experience and itself out of lucrative business decides to "innovate" yet again.

"Everything Goldman has done in the last 30 to 40 years has all been focused on the commercial side, or things that abut it very closely," said Chris Kotowski, a bank analyst with Oppenheimer & Company. "I refuse to believe that hiring a couple of programmers and offering to make $15,000 loans online is a highly value-added banking strategy."
[my emphasis]

And, it gets better:

The initial financing for the loans would come from certificates of deposit, which Goldman has been amassing in recent years. As the business grows, the bank may securitize the loans -- bundle them and sell them to investors -- to reduce some of the risk that it holds on its own books.

Is that a tornado klaxon I hear?

No Trump is The Highest Suit

There is a God. Donald Trump is running for president!!! Finally, someone willing to say it like it is, to quote Leona, "We don't pay taxes. Only the little people pay taxes." If only the 1% had yet more of GDP, the 99% will be so much better off. May the banter begin.

White Lies

Matthew Herper is an interesting pundit. He writes for "Forbes", but doesn't routinely pander to corporations. Here's the first sentence from a new piece:

Seven times between August 11, 2008, and June 27, 2013, the Food and Drug Administration declined to approve a new medicine, in part, because patients were more likely to die when taking the drug than in a control group. Yet only one of those companies told investors -- and the public -- about that concern.

Mind, he didn't do much digging here. He's just reporting on a study. But, still, he could have ignored it. FDA is something of a tar baby; drug companies routinely complain that the agency impedes them from getting wonder drugs on the market, while PIRGs and doctors and patient advocates oft times complain that FDA bends over routinely. The Namenda fiasco is archetypal.

One might wonder which whiz-kid figured out that by simply changing the dosage, the company could increase profit at virtually no expense? The truth about quant.

Support Your Local Cop

For those with an interest, especially a betting one, in the NBA Finals, you should send Joey Crawford a really big fruit basket. The previous three games of the Cleveland Criminals betting the crap out of the Golden State Wimps, notably Soft Steph, came to a screeching halt. Basketball is, by definition, a non-contact sport.

Straight from the NBA site:

Hand Checking: A defender may not place and keep his hand on an opponent unless he is in the area near the basket with his back to the basket. A defender may momentarily touch an opponent with his hand anywhere on the court as long as it does not affect the opponent’s movement (speed, quickness, balance, rhythm).

Delly played bump and run about as well as Revis, BJ (Before Joey). But, he's way too small for the NFL.

Cognitive Dissonance

My colleagues in the psych- disciplines invented the term, and it appears in reality all too often. Case in point: this story on MicroSoft making touch screens in the USofA. I'll suppose that it was crafted as a feel good story.

But... there's that graph. Those on both the Left and the Right yap about No Child Left Behind and STEM. The fact is, US business runs as far away from educated workers as fast and as far as it can get. Welcome to the Robo Cop Era.

Delta Dawn

Over the past few weeks, there've been a few pissing contests, some of which experienced my participation, over the benefits and necessities of large n studies. In one case, two compounds with similar indications had n of 12 and 1,500, and the argument was over whether the 1,500 sized trial would, by size alone, produce more believeable, i.e. stat sig, results.

Naturally, I piped up with the standard, within the quant community, observation that the larger the delta between control and active, the fewer observations (n) one needs to reach stat sig. With big differences, small counts suffice.

Well, boy howdy. Today Sage releases data on its postpartum depression drug, SAGE-547. The measure used went from 26.5 (before) to 1.8 (after). The p = .001 for a paired t-test. There were 4 women in the trial. 4.

Matthew Herper has a long-ish write up, with usual caveats about the study, drug and so forth. And no arguments from me. Big delta, little trial.

On the other hand, crafty bio-pharma will fund trials with thousands of patients to generate stat sig on teeny, tiny deltas. All in hope of getting FDA to approve. When Pharma weeps that it cost $$$ to get a drug approved, remember why: large studies to demonstrate stat sig on minuscule difference eat a lot of moolah. Such a waste. With wily sales reps, these drugs might make some money. Naturally, Sage is in Cambridge (not the one in England) and run by a Harvard guy.

Potable Software

If you watch "Jeopardy!", recall that in the middle of the first game, Trebek chats with each contestant, with the current champion generally getting the most leeway. A couple of times, although many years ago, I took the test (the first when Merv had the first casino in Atlantic City used for the tryouts, a converted hotel) and passed. Never got the call. I called my sister, who lives in the San Diego area, if she could find out what the deal was. What she found was that the producers mostly took walk-ins! Oh well.

Anyway, I occasionally consider what my patter would be during that intermission. Herewith:

I'm a writer, with two projects, one on macro-economics and one on databases and quantitative analysis. The macro folks tend think about what's best for all, while the quant types focus on what's best for just their employer. These concerns sometimes converge like this. Suppose you're an almond farmer in the Central Valley today. In order to beat the other farmers, you drill a thousand foot well and have plenty of water, and get a bumper crop of almonds (they're especially thirsty bits). You get rich, while those other farmers go poor. But what happens if all the almond farmers in the Central Valley drill thousand foot wells? If the strategy works, for the season, all the farmers have bumper crops, which explodes the supply and crashes the price. They'll all be lucky to have enough to pay for the wells. Nobody gets rich. Oh, and there's no more water left in the aquifer for anybody.

Fishermen face a similar problem. Always have.

A fanciful tale, some would say. Just another example of what Your Good Mother taught you: "what would the world be like if everybody behaved like you?". Gentle reader, you've read it here many times.

Turns out, not so fanciful.

Like it or not, the 19th century is long gone; those days of infinite supply of whatever resource made money. Hell, the Dust Bowl wasn't all that long ago.

"You drill a well on your property, you draw it out, even if it means you draw from under your neighbor's property," [Jay Famiglietti, senior water scientist at the NASA Jet Propulsion Laboratory] says. "You're drawing water from every direction."
Underground water supply isn't fenced or restricted; it is moisture held in the soil, rocks and clay, and drawn through wells like soda through a straw.