35 results back to index
Affordable Care Act / Obamacare, Airbnb, algorithmic trading, barriers to entry, Berlin Wall, bitcoin, Build a better mousetrap, centralized clearinghouse, Chuck Templeton: OpenTable, commoditize, computer age, computerized markets, crowdsourcing, deferred acceptance, desegregation, experimental economics, first-price auction, Flash crash, High speed trading, income inequality, Internet of things, invention of agriculture, invisible hand, Jean Tirole, law of one price, Lyft, market clearing, market design, medical residency, obamacare, proxy bid, road to serfdom, school choice, sealed-bid auction, second-price auction, second-price sealed-bid, Silicon Valley, spectrum auction, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, The Wealth of Nations by Adam Smith, two-sided market
Shapley and Scarf showed that for any preferences that patients and their surgeons might have regarding which kidneys they would like, there was always a way to find a set of cyclical trades they called “top trading cycles,” with the property that no group of patients and donors could go off on their own and find a cycle of trades that they liked better. Organizing trades this way would help make it safe for surgeons to enroll their patients in such a market, since the patients couldn’t do better by trading differently among themselves. As I began to play with this model, I started to think of it as the potential architecture for a centralized clearinghouse that could help traders overcome the obstacles to barter. But for such a clearinghouse to find the most desirable set of trades, it would need to have access to patients’ needs and preferences, and so participation would have to be safe in another way, too. Since preferences are by and large private information, for a clearinghouse to work people would have to reveal this information.
Speed is of the essence in making these markets work differently than the “day ahead” market that already existed for limos. In some respects, these services are faster even than taxis: you don’t have to take time to pay when you reach your destination, since the same app through which you called the car will also pay the bill automatically through your credit card. This works because your original call goes through a central clearinghouse that archives your credit card details. Perhaps you are beginning to see a pattern here and can anticipate (even build) marketplaces that don’t yet exist. Limousines have been around for a long time, and there have always been spare bedrooms that you could arrange to rent through friends. But computers and smartphones have helped Uber and Airbnb build multibillion-dollar businesses by making those markets thicker and quicker, bigger and less congested.
Instead of a completely decentralized market, they proposed to organize the last stage of the market through a centralized marketplace, a kind of clearinghouse. It proved to be a critical, even historic, decision. Under the new plan, third-year medical students would apply to residency programs on their own, as before, and the residency programs would invite them to interviews, also as before. But then a change: after the interviews had been conducted, the process of making offers would be done through the new centralized clearinghouse. This meant that students would submit to the clearinghouse a rank order list of the residency programs at which they had interviewed, indicating their first choice, second choice, and so on. In parallel, those residency programs would submit a rank order list of students. Before the clearinghouse opened, both applicants and employers would exchange information about job descriptions (including wages and other features) and about the applicants’ qualifications, so that each side could form well-considered preferences regarding the other.
Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, centralized clearinghouse, Chuck Templeton: OpenTable, clean water, conceptual framework, constrained optimization, continuous double auction, creative destruction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uranium enrichment, Vickrey auction, Vilfredo Pareto, winner-take-all economy
(According to market design guru Al Roth, one theory holds that the term “fraternity/sorority rush,” which today describes the process by which sororities and fraternities recruit new members, comes from the frenzied competition among sororities to lock in new members.4) It’s what prompted medical residency programs to develop a centralized clearinghouse in the 1940s to fend off students receiving exploding offers before they were done with their intro to anatomy course. These allocation problems all now have centralized clearinghouses, many designed with the basic deferred acceptance algorithm as their foundations. But that’s really all that Gale and Shapley provided: a conceptual framework that market designers have, for several decades now, been applying, evaluating, and refining. They’ve learned from its successes and, unfortunately, learned even more from its inevitable failures: modeling real-life exchanges is an imprecise, iterative process in which many of us find ourselves as experimental subjects.
Within a week or two, Vlachos Junior was leaving an hour before the opening bell. What, Vlachos Senior wondered, was going on? It turned out that there weren’t quite enough coat hooks at the back of his classroom to go around, and later arrivals had to leave their jackets crumpled on a bench (apparently a source of grade school ignominy for order-loving Swedes). So the “market” for coat hooks began to unravel backward in much the same way that, in the absence of a centralized clearinghouse, residency programs and judges raced to recruit medical and law students earlier and earlier. Now, Jonas Vlachos is hardly an apologist for the glories of free enterprise and markets. He’s from Sweden, for one thing, and Scandinavians are known worldwide for their love of big taxes and big government. More personally, Vlachos has been a vocal critic of his country’s market-like approach to education, which is based in part on the school choice vision laid out by Milton Friedman, an icon of laissez-faire ideology.
INDEX Abidjan, Ivory Coast, 167–168 Adfibs.com, 69 adverse selection, 48, 51–55, 57, 59 advertising, as money burning, 70–71 Super Bowl advertising, 70–71 AdWords, 14, 101 Airbnb, 3, 6, 50, 109, 125, 170–172 Akerlof, George, 43–51, 58–59, 64, 112 Alaskoil experiment, 55–57, 58–59 algebraic topology, 44–45 Amazon, 2, 3, 16, 50, 51, 52, 59, 74, 91, 95, 97, 108, 110, 119, 126, 128–129 American Express, 115–116 America’s Second Harvest, 154–160 Amoroso, Luigi, 21 Angie’s List, 120 “animal spirits,” 50 applied theory in economics, 45, 50, 75–76 Arnold, John, 156–158, 160 Arrow, Kenneth, 30–34, 36–37, 40, 76, 117, 180 ascending price English auctions, 83, 100 asymmetric information, 41, 44–55 attribution theory, 177–178 auctions AdWords, 14, 101 auction theory, 82–84 coat hooks, 151–152, 174 design, 14, 101–102 first-price sealed-bid, 86–87, 99–100 first-price (live), 84 internet, 94–97 types of, 81–82 wireless spectrum, 102–103 See also eBay; Vickrey auctions AuctionWeb, 40 Ausubel, Larry, 98 Azoulay, Pierre, 112 Bank of America, 113–115 barriers to entry, in marketplace, 173 baseball posting system, 79–81 Bazerman, Max, 55–57 Becker, Gary, 35, 161–162 Berman, Eli, 67 Berners-Lee, Tim, 41–42 Big Data, Age of, 15 Blu-ray-HD DVD format war, Sony, 125–126 Book Stacks Unlimited, 42–43 Boston public schools, 144–149 Boston University MBA students experiment (Bazerman and Samuelson), 55–57, 58–59 See also Alaskoil experiment bridge design, 141–142 Brown, William P., 83–84 Brownian motion, 28–29 cab drivers, Uber vs., 169–170, 172 Camp, Garrett, 170 candle auctions, 82 capitalism, free-market, 172–173 car service platform, 169–171 cash-back bonus, 116 cash-for-sludge transactions, 167–169 See also Summers, Larry centralized clearinghouses, 140–141 Champagne fairs, 105–106, 126–128 Changi POW camp, 175–177 Le Chatelier, Henry Louis, 29 Le Chatelier’s principle, 29 cheap talk, 62–66, 69 chess, difference between Cold War and, 26 See also poker, bluffing in child labor, 180 cigarettes, as currency in German POW camp, 8–9 Clarke, Edward, 93 Clavell, James, 175 clerkship offers, with federal judges, 140 coat hook, 151–152, 174 Codes of the Underworld (Gambetta), 68 Cold War, difference between chess and, 26 See also poker, bluffing in Collectible Supplies, 128–129 “College Admissions and the Stability of Marriage” (Gale and Shapley), 137 commitment, signs of, 62–63, 69–71, 72–75 community game, 178–179 competition models of, 35, 166, 172–173 platform, 124–126 unethical conduct with, 180–181 “Competition is for Losers” (Thiel), 173 competitive equilibrium, existence of, 29, 31–34, 36–37, 40, 45, 76 competitive markets, 35, 124–126, 172–174, 180–181 See also platforms competitive signaling, 70–71 congestion pricing model, 86, 94 constrained optimization, 85–86, 133 contractorsfromhell.com, 120 copycat competitors, 172–173 corporate philanthropy, 72–75 Cowles, Alfred, 25, 27 Cowles Commission for Research in Economics, 25, 27, 31, 134 “creative destruction,” 50 credit card platforms, 113–116, 123–124 criminal organizations, informational challenges of, 68 currency, at Stalag VII-A POW camp, 8–9 customer feedback, 52, 74–75 Davis, Harry, 154, 157 Debreu, Gérard, 20, 24, 25, 32–33, 36–37 decentralized match, 139–140 deferred acceptance algorithm, 137–141, 145–149 Delmonico, Frank, 164 descending price auctions, 81–82 design, auction, 14, 101–102 Digital Dealing (Hall), 94 Discover card, 115–116 distribution of income, 22 Domar, Evsey, 36–37 Dorosin, Neil, 142–144 Douglas Aircraft Company, 25 Dow, Bob, 1–2 Dow, Edna, 1–2 Drèze, Jacques, 85–86 dumping toxic waste, transactions for, 167–169 Dutch auctions, 81–82 dysfunction, market, 36, 75–77, 143 eBay adverse selection on, 51–55, 57 auction listings, 94–97 concerns on model for, 43, 46, 48 on seller motivation for giving to charities, 73–75 start of, 39–41 as two-sided market, 109, 119 e-commerce, 41–43, 52–55 “The Economic Organization of a P.O.W.
The Alliance: Managing Talent in the Networked Age by Reid Hoffman, Ben Casnocha, Chris Yeh
Airbnb, Amazon Web Services, centralized clearinghouse, cloud computing, Jeff Bezos, Jony Ive, Marc Andreessen, new economy, pre–internet, Silicon Valley, Silicon Valley startup, software as a service, Steve Jobs
Now that the book is available to the public, we expect you, the reader, to add to this collection of questions and improvements. Perhaps your industry has unique dynamics, and you want to know how the alliance needs to adapt to those dynamics. Perhaps there’s a variation on the tour of duty framework that would work best in your company. That’s why we’ve created TheAllianceFramework.com. This website and the related LinkedIn group will act as a central clearinghouse for additional content, interactive assessments, and even practical worksheets and training guides, to expand our collective understanding of the alliance. You’ll also find information about keynote speaking, training sessions, and webinars. We invite you to join us at TheAllianceFramework.com, to help us explore these issues and to help you bring the alliance to your organization. Notes Chapter 1 1 See http://www.nytimes.com/2001/04/08/business/off-the-shelf-after-the-downsizing-a-downward-spiral.html. 2 John Hagel III, John Seely Brown, and Lang Davidson, The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion (New York: Basic Books, 2010), 12. 3 Harold Meyerson, “The Forty-Year Slump: The State of Work in the Age of Anxiety,” The American Prospect, November 12, 2013, http://prospect.org/article/40-year-slump. 4 Ibid. 5 Towers Watson 2012 Global Workforce Study, Engagement at Risk: Driving Strong Performance in a Volatile Global Environment, July 2012, http://www.towerswatson.com/en-AE/Insights/IC-Types/Survey-Research-Results/2012/07/2012-Towers-Watson-Global-Workforce-Study. 6 Susan Adams, “Trust in Business Falls Off a Cliff,” Forbes, June 13, 2012, http://www.forbes.com/sites/susanadams/2012/06/13/trust-in-business-falls-off-a-cliff/. 7 Reed Hastings, “Netflix Culture: Freedom & Responsibility,” August 1, 2009, SlideShare presentation, http://www.slideshare.net/reed2001/culture-1798664. 8 “Pixar Total Grosses,” Box Office Mojo, http://boxofficemojo.com/franchises/chart/?
The Man Who Knew: The Life and Times of Alan Greenspan by Sebastian Mallaby
airline deregulation, airport security, Andrei Shleifer, anti-communist, Asian financial crisis, balance sheet recession, bank run, barriers to entry, Benoit Mandelbrot, Bretton Woods, central bank independence, centralized clearinghouse, collateralized debt obligation, conceptual framework, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, energy security, equity premium, fiat currency, financial deregulation, financial innovation, fixed income, Flash crash, forward guidance, full employment, Hyman Minsky, inflation targeting, information asymmetry, interest rate swap, inventory management, invisible hand, Kenneth Rogoff, Kitchen Debate, laissez-faire capitalism, Long Term Capital Management, low skilled workers, market bubble, market clearing, Martin Wolf, money market fund, moral hazard, mortgage debt, Myron Scholes, new economy, Nixon shock, Northern Rock, paper trading, paradox of thrift, Paul Samuelson, Plutocrats, plutocrats, popular capitalism, price stability, RAND corporation, rent-seeking, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, Saturday Night Live, savings glut, secular stagnation, short selling, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, unorthodox policies, upwardly mobile, WikiLeaks, women in the workforce, Y2K, yield curve, zero-sum game
Moreover, the thrust of her regulatory instincts came to be widely accepted after the 2008 crisis, providing a belated vindication.9 In essence, her chief worry was that the fastest-growing parts of the derivatives market lacked the stabilizing institutions of traditional, exchange-traded equities or futures, with the result that the whole market could descend into chaos if a large trading firm declared bankruptcy. One such stabilizing institution was the central clearinghouse, which stood between buyer and seller and guaranteed payments on trades; unnervingly, non-exchange-based derivatives were traded “over the counter,” with banks entering into swap contracts directly with each other—there was no third-party guarantee that obligations would be honored. Another stabilizing institution was the requirement that traders put down money, or “margin,” to cover their potential debts; in over-the-counter markets, there were no standard margin requirements, so the potential losses from nonpayment were larger.
The day after the government takeover of the GSEs, Lehman Brothers entered its own death spiral. Unlike Fannie and Freddie, Lehman Brothers fell into the Bear Stearns category: it was a poster child for the financial practices that Greenspan had defended.40 It was party to almost a million bilateral derivatives contracts, those over-the-counter deals that Brooksley Born had wanted to move into centralized clearinghouses. It was also an enthusiastic responder to the incentives created by the Fed: it had borrowed billions in short-term funds, loading up on cheap money while interest rates were low and using it to buy higher-yielding mortgages. In Greenspan’s more hopeful moments, he had trusted that Lehman would take such risks only if it had sufficient capital to absorb losses. In the absence of adequate capital buffers, after all, other savvy institutions should have refused to trade with it: Why enter into a swap contract with a firm that might fail and renege on it?
Understanding that market discipline was fallible, but fearing correctly that regulation might also fail, Greenspan could have pushed harder for that regulatory third way: mechanisms to ensure that when the inevitable failures did occur, the damage could be minimized. Thicker capital cushions were an obvious example—Timothy Geithner had tried and failed to get this done, but he might have achieved more given stronger support from the Fed chairman. Pushing over-the-counter derivatives into central clearinghouses was another example: had Greenspan thrown his weight behind a sounder version of Brooksley Born’s proposal, it might have been harder for AIG to accumulate a swaps portfolio so large that it menaced the entire economy.42 Discouraging too-big-to-fail lenders was yet a third example of a path not taken: during the crisis, large banks, investment banks, and shadow banks were exposed as having been more reckless than supposedly risky hedge funds, because the latter were small enough to fail, and so had fewer corrupting incentives.43 Forcing more regulation onto the shadow-banking sector could have been the final item on a resiliency agenda.
Airbnb, airport security, Albert Einstein, altcoin, Amazon Web Services, bitcoin, Black Swan, blockchain, business process, centralized clearinghouse, Clayton Christensen, cloud computing, cryptocurrency, disintermediation, distributed ledger, Edward Snowden, en.wikipedia.org, ethereum blockchain, fault tolerance, fiat currency, fixed income, global value chain, Innovator's Dilemma, Internet of things, Kevin Kelly, Kickstarter, market clearing, Network effects, new economy, peer-to-peer, peer-to-peer lending, prediction markets, pull request, QR code, ride hailing / ride sharing, Satoshi Nakamoto, sharing economy, smart contracts, social web, software as a service, too big to fail, Turing complete, web application
In reality, what they will do initially is to pick and choose what they like and disregard what they do not like about it. Although a global bank or exchange is not happening any time soon, the feelings and behaviors of a global bank are needed. The blockchain can help. The Financial Services sector will need to stall new regulation while simultaneously updating the existing regulation to accommodate the innovation introduced by the blockchain. The litmus test is to run transactions without a central clearinghouse in the middle. Verifying identity and validating counterparties can be done in a peer-to-peer manner on the blockchain, and that is the preferred method that organizations should be trying to perfect. Strategic decisions await financial institutions, and they must have the courage to leapfrog, and not just advance to the next level playing field and be content with it. NOTES 1. PayPal “Who we are,” https://www.paypal.com/webapps/mpp/about. 2.
centralized clearinghouse, index card, lone genius, market bubble, Merlin Mann, New Journalism, Results Only Work Environment, rolodex, side project, Silicon Valley, Steve Jobs, Steve Wozniak, supply-chain management, Tim Cook: Apple, Tony Hsieh, young professional
However, you will still need time for processing—going through all of your day’s notes and communications and distilling them down to the primary elements. For those who still take paper notes and appreciate tangible project management, you will want to use a tangible in-box—a general pile of stuff that has yet to be classified. Most productivity frameworks—like David Allen’s Getting Things Done—suggest such a central clearing-house for all of the stuff that you accumulate but can’t immediately execute or file. This in-box is not a final destination, but rather a transit terminal where items await processing. During a busy day of meetings, you will not have time to start taking action or filing things away. How about all of the digital stuff that flows in every day? Your e-mail in-box is the primary landing spot, but information also flows into other online applications.
What They Do With Your Money: How the Financial System Fails Us, and How to Fix It by Stephen Davis, Jon Lukomnik, David Pitt-Watson
activist fund / activist shareholder / activist investor, Admiral Zheng, banking crisis, Basel III, Bernie Madoff, Black Swan, centralized clearinghouse, clean water, computerized trading, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crowdsourcing, David Brooks, Dissolution of the Soviet Union, diversification, diversified portfolio, en.wikipedia.org, financial innovation, financial intermediation, fixed income, Flash crash, income inequality, index fund, information asymmetry, invisible hand, Kenneth Arrow, light touch regulation, London Whale, Long Term Capital Management, moral hazard, Myron Scholes, Northern Rock, passive investing, performance metric, Ponzi scheme, principal–agent problem, rent-seeking, Ronald Coase, shareholder value, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, Steve Jobs, the market place, The Wealth of Nations by Adam Smith, transaction costs, Upton Sinclair, value at risk, WikiLeaks
Having regulators know exactly what CDSs are outstanding and where they are can only help in their efforts to maintain a stable financial system. Other financial instruments can also, in Warren Buffett’s memorable phrase, become “financial weapons of mass destruction.” Public disclosure of terms and conditions should be a requirement before any financial instrument can be tradable or transferable.38 While CDS terms are becoming standardized, thanks to the International Swaps and Derivatives Association, there is no central clearinghouse of such instruments.39 We could also use information to keep our regulators on their toes. If we want financial markets around the world to be effective, why isn’t there a global rating of regulators? Since investors can be expected to gravitate to the most trustworthy financial centers, such a rating might help create a race to the top, rather than one to the bottom. The Financial Stability Board has already identified “Key Standards for Sound Financial Systems.”40 What is missing is a commitment from the FSB to publish a market-by-market assessment of how well each market adheres to the standards.
3D printing, 4chan, A Declaration of the Independence of Cyberspace, Airbnb, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, big-box store, bitcoin, business climate, call centre, Cass Sunstein, centralized clearinghouse, Chelsea Manning, citizen journalism, cloud computing, collaborative consumption, collaborative editing, commoditize, creative destruction, crony capitalism, cross-subsidies, crowdsourcing, David Brooks, death of newspapers, Donald Trump, Douglas Engelbart, Douglas Engelbart, en.wikipedia.org, Exxon Valdez, Fall of the Berlin Wall, Filter Bubble, Firefox, Galaxy Zoo, global supply chain, Google Chrome, Gordon Gekko, Hacker Ethic, Jaron Lanier, Jeff Bezos, jimmy wales, John Markoff, Julian Assange, Kevin Kelly, Khan Academy, Kickstarter, Lean Startup, Mark Zuckerberg, minimum viable product, Mohammed Bouazizi, Mother of all demos, Narrative Science, new economy, Occupy movement, old-boy network, peer-to-peer, period drama, Peter Thiel, pirate software, publication bias, Robert Metcalfe, Ronald Reagan, Ronald Reagan: Tear down this wall, sharing economy, Silicon Valley, Skype, social web, Steve Jobs, Steve Wozniak, Stewart Brand, Stuxnet, Ted Nelson, Telecommunications Act of 1996, telemarketer, The Wisdom of Crowds, transaction costs, uranium enrichment, Whole Earth Catalog, WikiLeaks, Zipcar
It demolishes the “bigness” of the old institution—the “invisible primary” of money and major donor access—by taking advantage of a fundamental characteristic of radical connectivity: the ability to connect everyone equally. With enough time and energy, anyone can use ActBlue to build a political money power base within the Democratic Party—not just W. Averell Harriman or Hillary Clinton. And yet as a central clearinghouse, ActBlue is in its own way Big; it just hasn’t wielded its big power yet, preferring to remain a boring (but vital) piece of infrastructure. To that extent, ActBlue may provide one important structure for revamping our parties so that they are democratic and yet still capable of producing serious leaders addressing serious issues. Meetup Of course, politics is about more than money.
The Great Influenza by John M. Barry
Albert Einstein, Brownian motion, centralized clearinghouse, Chance favours the prepared mind, conceptual framework, discovery of penicillin, double helix, Fellow of the Royal Society, germ theory of disease, index card, Louis Pasteur, Marshall McLuhan, Mason jar, means of production, statistical model, the medium is the message, the scientific method, traveling salesman, women in the workforce
Grim human alignments became, in their cool vistas, delicate symphonies in white…. Doctors ruled, for me, so gently, the whole still concert.” Behind this still concert lay Welch, the impresario. By the first decade of the twentieth century, Welch had become the glue that cemented together the entire American medical establishment. His own person became a central clearinghouse of scientific medicine. Indeed, he became the central clearinghouse. As founding editor of the Journal of Experimental Medicine, the first and most important American research journal, he read submissions that made him familiar with every promising new idea and young investigator in the country. He became a national figure, first within the profession, then within science, then in the larger world, serving as president or chairman of nineteen different major scientific organizations, including the American Medical Association, the American Association for the Advancement of Science, and the National Academy of Sciences.
Bernie Madoff, the Wizard of Lies: Inside the Infamous $65 Billion Swindle by Diana B. Henriques
accounting loophole / creative accounting, airport security, Albert Einstein, banking crisis, Bernie Madoff, break the buck, British Empire, centralized clearinghouse, collapse of Lehman Brothers, computerized trading, corporate raider, diversified portfolio, Donald Trump, dumpster diving, Edward Thorp, financial deregulation, financial thriller, fixed income, forensic accounting, Gordon Gekko, index fund, locking in a profit, mail merge, merger arbitrage, money market fund, Plutocrats, plutocrats, Ponzi scheme, Potemkin village, random walk, Renaissance Technologies, riskless arbitrage, Ronald Reagan, short selling, Small Order Execution System, source of truth, sovereign wealth fund, too big to fail, transaction costs, traveling salesman
Besides the phoney trade confirmations and account statements that had been generated for more than a decade, he had set up the bogus “trading platform” that made it appear as if actual trades were being conducted with European counterparties, although the reciprocal trader was actually an employee on another computer terminal hidden in a different room. And he had the clincher: apparent proof that all the stocks he claimed to have purchased were safely held in Madoff’s account at Wall Street’s central clear-inghouse, the Depository Trust & Clearing Corporation, officially called the DTCC but known informally among veteran traders as “the DTC”. This was the acid test for DiPascali’s masterpiece, a computer simulation of a live feed from the DTCC. He had taken care to duplicate exactly the clearinghouse’s logo, the page format, the printer font and type sizes, and the paper quality of actual DTCC reports.
The Gateway fund actually tracked the Fairfield Sentry fund fairly closely from 1993 until about 1997; thereafter the disparity between the two funds widened sharply as Gateway became more volatile and less profitable. 118 “Never in my wildest dreams did I think I would have partners like these”: Michael Carroll, Hal Lux, and Justin Schack, “Trading Meets the Millennium,” Institutional Investor, January 2000, pp. 36–53. 118 “Market timing and stock picking are both important for the strategy to work”: The Ocrant article in Markopolos, No One Would Listen, p. 292. 119 The following week, a similarly sceptical view: Erin Arvedlund, “Don’t Ask, Don’t Tell,” Barron’s, May 7, 2001. 119 “Much of it I thought was, frankly, just irresponsible journalism”: Galvin Fairfield Greenwich Complaint, transcript excerpts from interview with Jeffrey Tucker, Mar. 12, 2009, p. 97. (Excerpts were also cited as Exhibit 85 in Picard v. Fairfield Greenwich Amended Complaint.) 119 “Come up this afternoon”: According to Tucker’s testimony, Madoff extended a similar invitation that day to Carlo Grosso, a principal of the Kingate funds based in London, who was visiting New York. 119 Wall Street’s central clearinghouse, the Depository Trust & Clearing Corporation: Originally named the Depository Trust Company, the clearinghouse later combined with a separate clearinghouse called the National Securities Clearing Corporation, on whose board Madoff served in the late 1980s, and was renamed the Depository Trust & Clearing Corporation, or DTCC. According to the official DTCC history, the clearinghouses were “both created in response to the paperwork crisis that developed in the securities industry in the late 1960s and early 1970s.
algorithmic trading, asset allocation, asset-backed security, automated trading system, backtesting, Black Swan, Brownian motion, business process, capital asset pricing model, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, collective bargaining, computerized trading, diversification, equity premium, fault tolerance, financial intermediation, fixed income, high net worth, implied volatility, index arbitrage, information asymmetry, interest rate swap, inventory management, law of one price, Long Term Capital Management, Louis Bachelier, margin call, market friction, market microstructure, martingale, Myron Scholes, New Journalism, p-value, paper trading, performance metric, profit motive, purchasing power parity, quantitative trading / quantitative ﬁnance, random walk, Renaissance Technologies, risk tolerance, risk-adjusted returns, risk/return, Sharpe ratio, short selling, Small Order Execution System, statistical arbitrage, statistical model, stochastic process, stochastic volatility, systematic trading, trade route, transaction costs, value at risk, yield curve, zero-sum game
A similar effect was documented by Stoll and Whaley (1990): for returns measured in 5-minute intervals, both S&P 500 and money market index futures led stock market returns by 5 to 10 minutes. The quicker adjustment of the futures markets relative to the equities markets is likely due to the historical development of the futures and 198 HIGH-FREQUENCY TRADING equities markets. The Chicago Mercantile Exchange, the central clearinghouse for futures contracts in North America, rolled out a fully functional electronic trading platform during the early 1990s; most equity exchanges still relied on a hybrid clearing mechanism that involved both human traders and machines up to the year 2005. As a result, faster informationarbitraging strategies have been perfected for the futures market, while systematic equity strategies remain underdeveloped to this day.
@War: The Rise of the Military-Internet Complex by Shane Harris
Amazon Web Services, barriers to entry, Berlin Wall, Brian Krebs, centralized clearinghouse, clean water, computer age, crowdsourcing, data acquisition, don't be evil, Edward Snowden, failed state, Firefox, John Markoff, Julian Assange, mutually assured destruction, peer-to-peer, Silicon Valley, Silicon Valley startup, Skype, Stuxnet, uranium enrichment, WikiLeaks, zero day
Operators of “critical infrastructure”—which could be broadly defined to include electrical companies, nuclear power plant operators, banks, software manufacturers, transportation and logistics companies, even hospitals and medical device suppliers, whose equipment could be hacked remotely—would be required by law or regulation to submit the traffic to and from their networks for scanning by an Internet service provider. The provider would use the signatures supplied by the NSA to look for malware or signs of a cyber campaign by a foreign government. It was a version of Alexander’s original plan to make the NSA the central clearinghouse for cyber threat intelligence. The NSA wouldn’t do the scanning, but it would give all the requisite threat signatures to the scanner. That helped the NSA avoid the impression that it was horning its way into private computer networks, even though it was actually in control of the whole operation. Once the scanners detected a threat, NSA analysts would move in and assess it. They would decide whether to let the traffic pass or to block it, or, if need be, to strike back at the source.
Utopia Is Creepy: And Other Provocations by Nicholas Carr
Air France Flight 447, Airbnb, Airbus A320, AltaVista, Amazon Mechanical Turk, augmented reality, autonomous vehicles, Bernie Sanders, book scanning, Brewster Kahle, Buckminster Fuller, Burning Man, Captain Sullenberger Hudson, centralized clearinghouse, cloud computing, cognitive bias, collaborative consumption, computer age, corporate governance, crowdsourcing, Danny Hillis, deskilling, digital map, Donald Trump, Electric Kool-Aid Acid Test, Elon Musk, factory automation, failed state, feminist movement, Frederick Winslow Taylor, friendly fire, game design, global village, Google bus, Google Glasses, Google X / Alphabet X, Googley, hive mind, impulse control, indoor plumbing, interchangeable parts, Internet Archive, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, Jeff Bezos, jimmy wales, job automation, Kevin Kelly, lifelogging, low skilled workers, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, Menlo Park, mental accounting, natural language processing, Network effects, new economy, Nicholas Carr, Norman Mailer, off grid, oil shale / tar sands, Peter Thiel, Plutocrats, plutocrats, profit motive, Ralph Waldo Emerson, Ray Kurzweil, recommendation engine, Republic of Letters, robot derives from the Czech word robota Czech, meaning slave, Ronald Reagan, self-driving car, SETI@home, side project, Silicon Valley, Silicon Valley ideology, Singularitarianism, Snapchat, social graph, social web, speech recognition, Startup school, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, technoutopianism, the medium is the message, theory of mind, Turing test, Whole Earth Catalog, Y Combinator
Such a blinkered and self-serving view of the world may be forgivable in a young entrepreneur trying to get an ambitious technology company off the ground, but as Google has grown and its influence expanded, its hubris has become a problem. It accounts for many of the missteps that have stained the company’s reputation in recent years. EDWARDS’S STORY ends when he leaves the company in March of 2005. In the years since, Google’s power and influence have only grown. It has become the web’s central clearinghouse for information and one of the internet’s principal tollgates. As people spend more time and do more things online, they also perform more Google searches and click on more Google ads—and the business’s coffers swell. But the company’s recent history is not quite as buoyant as its bottom line suggests. While it has introduced several attractive products, such as the Android operating system for smartphones and the Google Apps suite of cloud-computing programs, it has failed to discover strong new sources of profit.
Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity by Douglas Rushkoff
3D printing, activist fund / activist shareholder / activist investor, Airbnb, algorithmic trading, Amazon Mechanical Turk, Andrew Keen, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Burning Man, business process, buy low sell high, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, centralized clearinghouse, citizen journalism, clean water, cloud computing, collaborative economy, collective bargaining, colonial exploitation, Community Supported Agriculture, corporate personhood, corporate raider, creative destruction, crowdsourcing, cryptocurrency, disintermediation, diversified portfolio, Elon Musk, Erik Brynjolfsson, ethereum blockchain, fiat currency, Firefox, Flash crash, full employment, future of work, gig economy, Gini coefficient, global supply chain, global village, Google bus, Howard Rheingold, IBM and the Holocaust, impulse control, income inequality, index fund, iterative process, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joseph Schumpeter, Kickstarter, loss aversion, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, Marshall McLuhan, means of production, medical bankruptcy, minimum viable product, Naomi Klein, Network effects, new economy, Norbert Wiener, Oculus Rift, passive investing, payday loans, peer-to-peer lending, Peter Thiel, post-industrial society, profit motive, quantitative easing, race to the bottom, recommendation engine, reserve currency, RFID, Richard Stallman, ride hailing / ride sharing, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, social graph, software patent, Steve Jobs, TaskRabbit, The Future of Employment, trade route, transportation-network company, Turing test, Uber and Lyft, Uber for X, unpaid internship, Y Combinator, young professional, zero-sum game, Zipcar
Meanwhile, the currency they employ—bank-issued reserve notes—is itself the product of a trusted central authority that also charges for its services. This, as we have seen, is an even bigger drag on the potential velocity of money. What good is a distributed network like the Internet if all the actors on it still depend on central authorities in order to engage in peer-to-peer activity? How is it truly peer-to-peer if it goes through a central clearinghouse? It’s still a bunch of decentralized individuals, each interacting with a monopoly platform—a new front end on the same old system. These are the problems that the next generation of digital transaction networks are aiming to address. How can a distributed network of participants transfer and verify value collectively, without the need for a central authority? Is that even possible? Could a money system look and act less like iTunes and more like BitTorrent, where, instead of depending on a platform monopoly to negotiate everything, all the participants use protocols to interact with one another directly?
The Quants by Scott Patterson
Albert Einstein, asset allocation, automated trading system, beat the dealer, Benoit Mandelbrot, Bernie Madoff, Bernie Sanders, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Brownian motion, buttonwood tree, buy low sell high, capital asset pricing model, centralized clearinghouse, Claude Shannon: information theory, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, Doomsday Clock, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, fixed income, Gordon Gekko, greed is good, Haight Ashbury, I will remember that I didn’t make the world, and it doesn’t satisfy my equations, index fund, invention of the telegraph, invisible hand, Isaac Newton, job automation, John Meriwether, John Nash: game theory, law of one price, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, margin call, merger arbitrage, money market fund, Myron Scholes, NetJets, new economy, offshore financial centre, old-boy network, Paul Lévy, Paul Samuelson, Ponzi scheme, quantitative hedge fund, quantitative trading / quantitative ﬁnance, race to the bottom, random walk, Renaissance Technologies, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Sergey Aleynikov, short selling, South Sea Bubble, speech recognition, statistical arbitrage, The Chicago School, The Great Moderation, The Predators' Ball, too big to fail, transaction costs, value at risk, volatility smile, yield curve, éminence grise
In theory, hundreds of swaps, or more, can be written on a single bond. More commonly, swaps are written on baskets of hundreds or thousands of bonds and on other kinds of loans. They could metastasize without end—and did—reaching a value of more than $60 trillion a decade after Weinstein arrived on the scene. What’s more, since the trades were commonly done on a case-by-case basis on the so-called over-the-counter market, with no central clearinghouse to track the action, CDS trading was done in the shadow world of Wall Street, with virtually no regulatory oversight and zero transparency. And that was just the way the industry wanted it. Soon after Weinstein took the job, his boss (not Tanemura) jumped ship. Suddenly he was the only trader at Deutsche in New York juggling the new derivatives. It was no big deal, or at least it seemed that way.
Space Chronicles: Facing the Ultimate Frontier by Neil Degrasse Tyson, Avis Lang
Albert Einstein, Arthur Eddington, asset allocation, Berlin Wall, carbon-based life, centralized clearinghouse, cosmic abundance, cosmic microwave background, dark matter, Gordon Gekko, informal economy, invention of movable type, invention of the telescope, Isaac Newton, Karl Jansky, Kuiper Belt, Louis Blériot, Mars Rover, mutually assured destruction, Pluto: dwarf planet, RAND corporation, Ronald Reagan, Search for Extraterrestrial Intelligence, SETI@home, space pen, stem cell, Stephen Hawking, Steve Jobs, the scientific method, trade route, V2 rocket
Agencies which have established organizational structures outside their Federal laboratories, which have as their principal purpose the transfer of federally owned or originated technology to State and local government and to the private sector may elect to perform the functions of this subsection in such organizational structures. No Office of Research and Technology Applications or other organizational structures performing the functions of this subsection shall substantially compete with similar services available in the private sector. (d) Dissemination of technical information The National Technical Information Service shall (1) serve as a central clearinghouse for the collection, dissemination and transfer of information on federally owned or originated technologies having potential application to State and local governments and to private industry; (2) utilize the expertise and services of the National Science Foundation and the Federal Laboratory Consortium for Technology Transfer, particularly in dealing with State and local governments; (3) receive requests for technical assistance from State and local governments, respond to such requests with published information available to the Service, and refer such requests to the Federal Laboratory Consortium for Technology Transfer to the extent that such requests require a response involving more than the published information available to the Service; (4) provide funding, at the discretion of the Secretary, for Federal laboratories to provide the assistance specified in subsection (c) (3) of this section; (5) use appropriate technology transfer mechanisms such as personnel exchanges and computer-based systems; and (6) maintain a permanent archival repository and clearinghouse for the collection and dissemination of nonclassified scientific, technical, and engineering information.
Flow by Mihaly Csikszentmihalyi
Albert Einstein, Bonfire of the Vanities, centralized clearinghouse, conceptual framework, correlation does not imply causation, double helix, fear of failure, Ignaz Semmelweis: hand washing, invisible hand, Isaac Newton, job satisfaction, Mahatma Gandhi, meta analysis, meta-analysis, Necker cube, pattern recognition, place-making, Ralph Waldo Emerson, the scientific method, Thomas Kuhn: the structure of scientific revolutions, Vilfredo Pareto
Thus, while consciousness is a mirror that reflects what our senses tell us about what happens both outside our bodies and within the nervous system, it reflects those changes selectively, actively shaping events, imposing on them a reality of its own. The reflection consciousness provides is what we call our life: the sum of all we have heard, seen, felt, hoped, and suffered from birth to death. Although we believe that there are “things” outside consciousness, we have direct evidence only of those that find a place in it. As the central clearinghouse in which varied events processed by different senses can be represented and compared, consciousness can contain a famine in Africa, the smell of a rose, the performance of the Dow Jones, and a plan to stop at the store to buy some bread all at the same time. But that does not mean that its content is a shapeless jumble. We may call intentions the force that keeps information in consciousness ordered.
No One Would Listen: A True Financial Thriller by Harry Markopolos
backtesting, barriers to entry, Bernie Madoff, call centre, centralized clearinghouse, correlation coefficient, diversified portfolio, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, family office, financial thriller, fixed income, forensic accounting, high net worth, index card, Long Term Capital Management, Louis Bachelier, offshore financial centre, Ponzi scheme, price mechanism, quantitative trading / quantitative ﬁnance, regulatory arbitrage, Renaissance Technologies, risk-adjusted returns, risk/return, rolodex, Sharpe ratio, statistical arbitrage, too big to fail, transaction costs, your tax dollars at work
Bloomberg machines have become the lifeblood of the industry, and they make readily available almost all of the data an SEC staffer needs for conducting a basic fraud analysis. Not funding these machines saves money but costs a fortune. Eleventh, as a policy, encourage whistleblowers. This is nearest and dearest to my heart and is the bottom line if the SEC intends to recover its reputation from this debacle. It has to open up an active Office of the Whistleblower to provide a central clearinghouse for complaints, which currently are handled ad hoc by 11 regional offices. According to the Association of Certified Fraud Examiners’ 2008 Report to the Nation, whistleblower tips detected 54.1 percent of uncovered fraud schemes in public companies. External auditors (and the SEC exam teams would certainly be considered external auditors) detected a mere 4.1 percent of the uncovered fraud schemes.
How Markets Fail: The Logic of Economic Calamities by John Cassidy
Albert Einstein, Andrei Shleifer, anti-communist, asset allocation, asset-backed security, availability heuristic, bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black-Scholes formula, Bretton Woods, British Empire, capital asset pricing model, centralized clearinghouse, collateralized debt obligation, Columbine, conceptual framework, Corn Laws, corporate raider, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Daniel Kahneman / Amos Tversky, debt deflation, diversification, Elliott wave, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, George Akerlof, global supply chain, Gunnar Myrdal, Haight Ashbury, hiring and firing, Hyman Minsky, income per capita, incomplete markets, index fund, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, laissez-faire capitalism, Landlord’s Game, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, Mikhail Gorbachev, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, Naomi Klein, negative equity, Network effects, Nick Leeson, Northern Rock, paradox of thrift, Pareto efficiency, Paul Samuelson, Ponzi scheme, price discrimination, price stability, principal–agent problem, profit maximization, quantitative trading / quantitative ﬁnance, race to the bottom, Ralph Nader, RAND corporation, random walk, Renaissance Technologies, rent control, Richard Thaler, risk tolerance, risk-adjusted returns, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, technology bubble, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, unorthodox policies, value at risk, Vanguard fund, Vilfredo Pareto, wealth creators, zero-sum game
If there is any wiggle room, excessive risk-taking and other damaging behavior will simply migrate to the unregulated sector. Imposing restrictions on the biggest hedge funds and private equity firms could well lead to a drastic shrinkage in these industries, which would be no great loss. Much of the activity that such firms engage in amounts to a zero-sum game, which doesn’t yield any economic gains for society at large. The proposed central clearinghouse for derivatives transactions is a good idea that doesn’t go far enough. By imposing leverage limits on traders, and demanding adequate collateral for exposed positions, the clearinghouse could eliminate a lot of counterparty credit risk. Unfortunately, the administration’s proposal applies only to “standardized” derivatives. Firms such as Goldman Sachs and Morgan Stanley would still be allowed to trade “customized” derivatives without public disclosure or central clearing.
Business Lessons From a Radical Industrialist by Ray C. Anderson
Albert Einstein, banking crisis, carbon footprint, centralized clearinghouse, clean water, cleantech, corporate social responsibility, Credit Default Swap, dematerialisation, distributed generation, energy security, Exxon Valdez, fear of failure, Gordon Gekko, greed is good, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), intermodal, invisible hand, late fees, Mahatma Gandhi, market bubble, music of the spheres, Negawatt, new economy, oil shale / tar sands, oil shock, old-boy network, peak oil, renewable energy credits, shareholder value, Silicon Valley, six sigma, supply-chain management, urban renewal, Y2K
Those offsets allow a university to burn the same fossil fuels, operate the same inefficient buildings, and waste as much material as ever, but pay for someone else to plant trees, perhaps in another country, or develop a wind farm in Texas. I can understand why they might find this approach attractive. Compared with the costs of reducing their own footprint, buying an offset can look very cost effective. And, very often, these offsets are both real and meaningful. Though there is no central clearinghouse to certify their legitimacy, they can still be examined and certified by independent third parties. When the offsets meet a set standard—and that standard requires independent verification, record keeping, and auditing measures—colleges and universities can have some faith in them. Are there abuses? Probably. But it is surely better than nothing. Yet it’s quite possible that there are more than a few offsets out there that have accomplished very little in the way of sustainability, no matter who bought what and for how much.
The Teeth of the Tiger by Tom Clancy
Too free a use of signal-intelligence information revealed its existence, causing the targets to change their methods of encryption, and so compromising the source. Using it too little, on the other hand, was as bad as not having it at all. Unfortunately, the intelligence services leaned more to the latter than the former. The creation of a new Department of Homeland Security had, theoretically, set up a central clearinghouse for all threat-related information, but the size of the new superagency had crippled it from the get-go. The information was all there, but in too great a quantity to be processed, and with too many processors to turn out a viable product. But old habits died hard. The intelligence community remained intact, a super-agency overtop its own bureaucracy or not, and its segments talked to each other.
Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley by Antonio Garcia Martinez
Airbnb, airport security, always be closing, Amazon Web Services, Burning Man, Celtic Tiger, centralized clearinghouse, cognitive dissonance, collective bargaining, corporate governance, Credit Default Swap, crowdsourcing, death of newspapers, drone strike, El Camino Real, Elon Musk, Emanuel Derman, financial independence, global supply chain, Goldman Sachs: Vampire Squid, hive mind, income inequality, information asymmetry, interest rate swap, intermodal, Jeff Bezos, Malcom McLean invented shipping containers, Marc Andreessen, Mark Zuckerberg, Maui Hawaii, means of production, Menlo Park, minimum viable product, move fast and break things, move fast and break things, Network effects, Paul Graham, performance metric, Peter Thiel, Ponzi scheme, pre–internet, Ralph Waldo Emerson, random walk, Ruby on Rails, Sand Hill Road, Scientific racism, second-price auction, self-driving car, Silicon Valley, Silicon Valley startup, Skype, Snapchat, social graph, social web, Socratic dialogue, source of truth, Steve Jobs, telemarketer, urban renewal, Y Combinator, zero-sum game, éminence grise
An advertiser still needed its old ad server to show ads on Google-controlled Web properties and everywhere else. This glittering vision in Facebook Blue of everything running on Facebook would take years to realize. By comparison, the value of the open plan would be realized instantaneously. If FBX had access to the identity matching we’d built on the Custom Audiences side, not to mention ads inventory on mobile, then the exchange could serve as a central clearinghouse for online identity everywhere. Everything we were ideating around identity, that entire spiel I regaled you with about names, both online and off, could be realized in a few weeks, all due to the open and standardized nature of FBX. And all of it implemented with three engineers and one cocky product manager, and not the roomful of bickering, big-company clowns that every meeting on the matter tended to feature.
3D printing, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, algorithmic trading, Alvin Roth, Asian financial crisis, asset allocation, bank run, Basel III, bonus culture, Bretton Woods, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, commoditize, computerized trading, corporate governance, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial intermediation, Frederick Winslow Taylor, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, information asymmetry, interest rate derivative, interest rate swap, Internet of things, invisible hand, John Markoff, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, knowledge economy, labor-force participation, labour mobility, London Whale, Long Term Capital Management, manufacturing employment, market design, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, Paul Samuelson, pensions crisis, Ponzi scheme, principal–agent problem, quantitative easing, quantitative trading / quantitative ﬁnance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, Satyajit Das, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, sovereign wealth fund, Steve Jobs, technology bubble, The Chicago School, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund, zero-sum game
To put finance back into the service of the real economy, you have to simplify, simplify, simplify. To do that, you have to increase transparency about what’s happening in the first place. In the commodities arena, former CFTC chairman Gary Gensler fought the good fight for stricter regulation of derivatives, bringing a large chunk of the swaps market out of the shadowy darkness and into central clearinghouses where it can be more easily regulated. In the United States most commodities-linked OTC derivatives are now subject to central clearing. The CFTC has also made big progress on real-time reporting and registration of brokers, so that people actually know who’s doing the trading. But achieving even this level of regulation has been a long, hard slog. Thanks to its relentless lobbying of Congress, the administration, and regulators both in the United States and overseas, Wall Street has succeeded in carving out important loopholes in the Dodd-Frank derivatives rules.
Goddess of the Market: Ayn Rand and the American Right by Jennifer Burns
anti-communist, bank run, barriers to entry, centralized clearinghouse, collective bargaining, creative destruction, desegregation, feminist movement, financial independence, George Gilder, invisible hand, jimmy wales, John Markoff, Joseph Schumpeter, knowledge worker, laissez-faire capitalism, lone genius, Menlo Park, minimum wage unemployment, Mont Pelerin Society, new economy, Norman Mailer, offshore financial centre, Ponzi scheme, profit motive, RAND corporation, rent control, road to serfdom, Robert Bork, rolodex, Ronald Reagan, side project, Stewart Brand, The Chicago School, The Wisdom of Crowds, union organizing, urban renewal, white flight, Whole Earth Catalog
The group rallied in protest on November 22, the date given in Atlas Shrugged for Galt’s delivery of his famous sixty-page speech. The small band of libertarians waving black flags with dollar signs in front of the Philadelphia Federal Courthouse was largely misunderstood, with several passersby accusing them of Communist sympathies.27 Even a reading of Galt’s individualist oath did little to clarify the protest’s intent. However inscrutable to outsiders, SIL quickly emerged as the central clearinghouse for the libertarian movement by dint of its free-form membership structure and the enthusiasm of its founders. Immediately after its birth SIL claimed 103 chapters, and at its first-year anniversary boasted thirteen hundred members, three thousand persons in contact with the organization, and 175,000 pieces of literature distributed.28 The 1972 directory of SIL was fat with libertarian organizations.
Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase by Duff McDonald
bank run, Bonfire of the Vanities, centralized clearinghouse, collateralized debt obligation, conceptual framework, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Exxon Valdez, financial innovation, fixed income, housing crisis, interest rate swap, Jeff Bezos, John Meriwether, laissez-faire capitalism, Long Term Capital Management, margin call, market bubble, money market fund, moral hazard, negative equity, Northern Rock, profit motive, Renaissance Technologies, risk/return, Rod Stewart played at Stephen Schwarzman birthday party, Saturday Night Live, sovereign wealth fund, statistical model, Steve Ballmer, Steve Jobs, technology bubble, The Chicago School, too big to fail, Vanguard fund, zero-coupon bond, zero-sum game
There have been some suggestions that the interplay between a company’s bonds and its credit default swaps actually exacerbated problems—George Soros wrote convincingly about this phenomenon in the New York Times—but that phenomenon was arguably on the margin of a much larger problem: abandonment of risk management controls in pursuit of higher profits. When it came time for the first big test of credit default swaps—in the aftermath of Lehman Brothers’ bankruptcy—the settlement of those contracts took place without incident on October 21, 2008. Dimon has endorsed the creation of a central clearinghouse so derivatives exposures can be more closely monitored. But he considers the bank’s CDS business a valuable franchise and doesn’t consider it JPMorgan Chase’s problem if other investors hurt themselves by mishandling them. (Pointing to a healthy lobbying budget on this score, critics argue that even though he’s said the right thing publicly, Dimon and his team are actually stonewalling derivatives reform in order to protect the outsize margins the business generates.)
Machine, Platform, Crowd: Harnessing Our Digital Future by Andrew McAfee, Erik Brynjolfsson
3D printing, additive manufacturing, AI winter, Airbnb, airline deregulation, airport security, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, artificial general intelligence, augmented reality, autonomous vehicles, backtesting, barriers to entry, bitcoin, blockchain, book scanning, British Empire, business process, carbon footprint, Cass Sunstein, centralized clearinghouse, Chris Urmson, cloud computing, cognitive bias, commoditize, complexity theory, computer age, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, Dean Kamen, discovery of DNA, disintermediation, distributed ledger, double helix, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, ethereum blockchain, everywhere but in the productivity statistics, family office, fiat currency, financial innovation, George Akerlof, global supply chain, Hernando de Soto, hive mind, information asymmetry, Internet of things, inventory management, iterative process, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, joint-stock company, Joseph Schumpeter, Kickstarter, law of one price, Lyft, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, Marc Andreessen, Mark Zuckerberg, meta analysis, meta-analysis, moral hazard, multi-sided market, Myron Scholes, natural language processing, Network effects, new economy, Norbert Wiener, Oculus Rift, PageRank, pattern recognition, peer-to-peer lending, performance metric, Plutocrats, plutocrats, precision agriculture, prediction markets, pre–internet, price stability, principal–agent problem, Ray Kurzweil, Renaissance Technologies, Richard Stallman, ride hailing / ride sharing, risk tolerance, Ronald Coase, Satoshi Nakamoto, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, speech recognition, statistical model, Steve Ballmer, Steve Jobs, Steven Pinker, supply-chain management, TaskRabbit, Ted Nelson, The Market for Lemons, The Nature of the Firm, Thomas L Friedman, too big to fail, transaction costs, transportation-network company, traveling salesman, two-sided market, Uber and Lyft, Uber for X, Watson beat the top human players on Jeopardy!, winner-take-all economy, yield management, zero day
Some technologies could help. For instance, increasingly ubiquitous sensors, as we are seeing with the Internet of things, could make possible the monitoring of far more of our actions and outcomes. Increased computer power could make it possible to simulate, choose, and store decisions for many future possible outcomes, and networks could make it possible to bring all this data and information to central clearinghouses for adjudication and resolution. But as fast as computers enable one party to anticipate outcomes, they enable other parties to consider more complex possibilities. Like the Red Queen in Alice in Wonderland, machines would have to run ever faster just to keep track of all the contingencies being generated. In the end, contracts would still be incomplete. The Company of the Future Will Actually Be Pretty Boring Companies also exist because they serve several other economic and legal functions that would be difficult to replicate in a world made up only of freelancers who constantly wrote contracts to work together.
Radical Technologies: The Design of Everyday Life by Adam Greenfield
3D printing, Airbnb, augmented reality, autonomous vehicles, bank run, barriers to entry, basic income, bitcoin, blockchain, business intelligence, business process, call centre, cellular automata, centralized clearinghouse, centre right, Chuck Templeton: OpenTable, cloud computing, collective bargaining, combinatorial explosion, Computer Numeric Control, computer vision, Conway's Game of Life, cryptocurrency, David Graeber, dematerialisation, digital map, distributed ledger, drone strike, Elon Musk, ethereum blockchain, facts on the ground, fiat currency, global supply chain, global village, Google Glasses, IBM and the Holocaust, industrial robot, informal economy, information retrieval, Internet of things, James Watt: steam engine, Jane Jacobs, Jeff Bezos, job automation, John Conway, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Kevin Kelly, Kickstarter, late capitalism, license plate recognition, lifelogging, M-Pesa, Mark Zuckerberg, means of production, megacity, megastructure, minimum viable product, money: store of value / unit of account / medium of exchange, natural language processing, Network effects, New Urbanism, Occupy movement, Oculus Rift, Pareto efficiency, pattern recognition, Pearl River Delta, performance metric, Peter Eisenman, Peter Thiel, planetary scale, Ponzi scheme, post scarcity, RAND corporation, recommendation engine, RFID, rolodex, Satoshi Nakamoto, self-driving car, sentiment analysis, shareholder value, sharing economy, Silicon Valley, smart cities, smart contracts, sorting algorithm, special economic zone, speech recognition, stakhanovite, statistical model, stem cell, technoutopianism, Tesla Model S, the built environment, The Death and Life of Great American Cities, The Future of Employment, transaction costs, Uber for X, universal basic income, urban planning, urban sprawl, Whole Earth Review, WikiLeaks, women in the workforce
This is the provision of the Bitcoin protocol that simultaneously incentivizes distributed work, and deters attempts at forgery: doing the gruntwork of validating previous transactions is the only way new Bitcoin gets made.12 This move kills quite a few birds with a single cryptographic stone. It neatly circumvents the problem of a mint arbitrarily diluting the value of existing currency by flooding the market with new coinage: we know the exact schedule on which new coins will be minted, and by what rules. It eliminates any need for a trusted intermediary to reconcile transactions: not through recourse to any central clearinghouse, but by consulting the local copy of a shared record that is annealed with all the others every time a block is confirmed. And it cunningly allows the network to insulate itself against forgery via proof-of-work, the very mechanism of artificial scarcity that underwrites Bitcoin’s value in the first place. What happens if someone does try to spend a given coin twice, erase the record of a payment, or otherwise tamper with consensus history?
Dreamland: The True Tale of America's Opiate Epidemic by Sam Quinones
1960s counterculture, Affordable Care Act / Obamacare, Albert Einstein, British Empire, call centre, centralized clearinghouse, correlation does not imply causation, crack epidemic, deindustrialization, feminist movement, illegal immigration, mass immigration, Maui Hawaii, McMansion, obamacare, zero-sum game
Brownlee said the records showed how the company was training salespeople to sell OxyContin as if it were nonaddictive and did not provoke withdrawal symptoms. Physicians, therefore, could feel comfortable prescribing it for many kinds of pain. “One of the pieces of evidence that was looked at were ‘call notes.’ The company had a process in which salesmen would go to a doctor, then summarize what was discussed. That went back to a central clearinghouse. Once we were able to see those, we began to see a pattern of conduct. Is this a few rogue guys or is this more of a corporate policy? It became clear that this was more than a few rogue [salesmen]. They were trained to sell the drug in a way that was simply not accurate. That was some of the best evidence of misbranding. “It was an extremely high percentage of sales reps in various states who were making these allegations.
Blackwater: The Rise of the World's Most Powerful Mercenary Army by Jeremy Scahill
air freight, anti-communist, Berlin Wall, Bernie Sanders, business climate, business intelligence, centralized clearinghouse, collective bargaining, Columbine, facts on the ground, Fall of the Berlin Wall, Naomi Klein, private military company, Project for a New American Century, Robert Bork, Ronald Reagan, school choice, school vouchers, stem cell, urban planning, zero-sum game
The revised report said that 3,646 people were wounded by terror attacks in 2003, more than double the number in Black’s original report, while 625 were killed, dwarfing the report’s original count of 307.92 As Krugman observed, Black and other officials blamed the errors on “‘inattention, personnel shortages and [a] database that is awkward and antiquated.’ Remember: we’re talking about the government’s central clearinghouse for terrorism information, whose creation was touted as part of a ‘dramatic enhancement’ of counterterrorism efforts more than a year before this report was produced. And it still can’t input data into its own computers? It should be no surprise, in this age of Halliburton, that the job of data input was given to and botched by private contractors.”93 Bush’s Democratic challenger in the 2004 presidential election, John Kerry, charged through a spokesperson that Bush was “playing fast and loose with the truth when it comes to the war on terror,” adding that the White House “has now been caught trying to inflate its success on terrorism.”94 There was talk of heads rolling at the State Department over the report, but not Black’s.
Albert Einstein, British Empire, business intelligence, centralized clearinghouse, City Beautiful movement, estate planning, glass ceiling, In Cold Blood by Truman Capote, indoor plumbing, Livingstone, I presume, new economy, Plutocrats, plutocrats, refrigerator car, transcontinental railway, traveling salesman, women in the workforce, Works Progress Administration, young professional
Harvey,” while possessing a brilliant and daring mind for business, had absolutely dreadful handwriting. Although Dave had started as little more than a bookkeeper, two years later Fred had him running the day-to-day operations for the entire chain—now more than a dozen different locations spread out over eleven hundred miles between Topeka and the western border of New Mexico. The Kansas City office became the communications hub of the company. It was also the central clearinghouse for the large amounts of cash generated by the eating houses. From the very beginning in Topeka, it was not uncommon for each house to generate at least $250 ($5,200) in pure profit each month. Many of them made much more—enough so that in locations that were less profitable, as long as the managers were doing a good job, they were told to maintain standards even if it meant running deficits.
The Bankers' New Clothes: What's Wrong With Banking and What to Do About It by Anat Admati, Martin Hellwig
Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bonus culture, break the buck, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, diversified portfolio, en.wikipedia.org, Exxon Valdez, financial deregulation, financial innovation, financial intermediation, fixed income, George Akerlof, Growth in a Time of Debt, income inequality, invisible hand, Jean Tirole, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, Larry Wall, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, margin call, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, negative equity, Nick Leeson, Northern Rock, open economy, peer-to-peer lending, regulatory arbitrage, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, Satyajit Das, shareholder value, sovereign wealth fund, technology bubble, The Market for Lemons, the payments system, too big to fail, Upton Sinclair, Yogi Berra
An example of such fake arm’s-length relations is provided by the system of German public banks, in which local savings banks, which are active in retail banking, collect more funds from depositors than they can use themselves and automatically invest large parts of their surplus funds with the Landesbanken, which are active in investment banking. In any arrangement, the key question is how to ensure proper governance for the funding of risky investment banking activities. 46. Attempts to form central clearinghouses for derivatives might actually create new and particularly dangerous systemically important institutions. Being owned by the participating banks would make the clearinghouses highly connected. It is essential that they have sufficient ability to absorb losses without needing any support from banks or from the government. Regulating them effectively would be critical. If more derivatives were traded on exchanges, this might increase financial stability without much harm to the economy.
Hard Landing by Thomas Petzinger, Thomas Petzinger Jr.
airline deregulation, centralized clearinghouse, collective bargaining, cross-subsidies, desegregation, Donald Trump, feminist movement, index card, low cost carrier, low skilled workers, Marshall McLuhan, means of production, mutually assured destruction, Network effects, offshore financial centre, oil shock, Ponzi scheme, postindustrial economy, price stability, profit motive, Ralph Nader, Ronald Reagan, Silicon Valley, strikebreaker, the medium is the message, The Predators' Ball, Thomas L Friedman, union organizing, yield management, zero-sum game
Having identified the most appropriate flight for a customer, the agent would then telephone the airline—or multiple airlines, perhaps, in the case of connecting flights—and make the appropriate reservations. The agent wrote each ticket by hand or wheeled it through a typewriter, compiled a written itinerary, collected the fare, and sent the money (less the commission, then fixed by the CAB at 5 percent) to a central clearinghouse, which in turn disbursed it to the airlines. Travel agents had to maintain a bundle of phone lines and a stable of clerks, typists, and reservationists while managing a library of travel literature to advise clients on vacation destinations and business arrangements. But what if the travel agents could go on-line? With a few keystrokes they would have instant electronic access to the schedules, eliminating the need to turn all those pages in the OAG.
Heaven's Command (Pax Britannica) by Jan Morris
British Empire, Cape to Cairo, centralized clearinghouse, Corn Laws, European colonialism, Fellow of the Royal Society, Khartoum Gordon, Khyber Pass, land reform, land tenure, Livingstone, I presume, Magellanic Cloud, mass immigration, means of production, Monroe Doctrine, Plutocrats, plutocrats, profit motive, Ralph Waldo Emerson, sceptred isle, Scramble for Africa, trade route
Since 1841 Kew Gardens, Queen Charlotte’s delicious belvedere beside the Thames outside London, had been a State institution, where all available botanical knowledge was considered, sifted and turned into green delight or sustenance; and by the middle of the century Kew had its derivatives or ancillaries in most of the British possessions—part pleasure-places, part scientific laboratories, with their learned keepers and their catalogues, experimenting, classifying, and sending a copious flow of samples, products or memoranda back to the central clearing-house at home. One important outpost in this chain of research was Jamaica, and a visitor to that island making a tour of its botanical gardens might be deluded into supposing that the British Empire was already a cohesive, centralized organization. Each of the three island gardens, each in a different climatic zone, played its own particular part in research, with its own specialities, its own methods, and its own team of diligent scientific gentlemen.
God's Bankers: A History of Money and Power at the Vatican by Gerald Posner
Albert Einstein, anti-communist, Ayatollah Khomeini, bank run, banking crisis, Bretton Woods, central bank independence, centralized clearinghouse, centre right, credit crunch, dividend-yielding stocks, European colonialism, forensic accounting, God and Mammon, Index librorum prohibitorum, liberation theology, medical malpractice, Murano, Venice glass, offshore financial centre, oil shock, operation paperclip, rent control, Ronald Reagan, Silicon Valley, WikiLeaks, Yom Kippur War
Notwithstanding its mix of international delegates, and even though it boasted an American president, it was firmly under Nazi control from 1940 on.3 The German BIS representatives were Baron Kurt von Schröder, a leading banker and Gestapo officer; Hermann Schmitz, the chief of the industrial conglomerate I. G. Farben; Walter Funk, Reichsbank president; and Emil Puhl, an economist and vice president of the Reichsbank.4 Under their influence, BIS became a central clearinghouse for emptying gold reserves from countries such as Austria, Belgium, and Czechoslovakia.5 “Washing gold” was the euphemism for how BIS described bringing bullion covertly into Switzerland and converting it into untraceable cash, usually Swiss francs.6 About 80 percent of all Reichsbank gold sent abroad was laundered through Switzerland.7 In early 1942, Puhl—who oversaw BIS’s gold program—shared with Funk that the Gestapo had begun depositing gold from concentration camps into the Reichsbank.8 By that November, an internal Reichsbank report noted that it had received an “unusually great” amount of smelted dental gold.9 In 1943, the Reichsbank received the first packets of gold stamped “Auschwitz” (it is impossible to determine precisely how much gold the SS sent to the Reichsbank since the records of those shipments that were seized by the U.S. military later disappeared; the United States failed to make copies before returning the documents to the predecessor of the Bundesbank, where the files were destroyed, allegedly as part of routine maintenance).10,I BIS was involved in far more than washing gold.
The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
affirmative action, Albert Einstein, anti-communist, Ayatollah Khomeini, barriers to entry, Bob Noyce, Bonfire of the Vanities, Brownian motion, capital asset pricing model, card file, centralized clearinghouse, collateralized debt obligation, computerized trading, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, Donald Trump, Eugene Fama: efficient market hypothesis, global village, Golden Gate Park, Haight Ashbury, haute cuisine, Honoré de Balzac, If something cannot go on forever, it will stop - Herbert Stein's Law, In Cold Blood by Truman Capote, index fund, indoor plumbing, intangible asset, interest rate swap, invisible hand, Isaac Newton, Jeff Bezos, John Meriwether, joint-stock company, joint-stock limited liability company, Long Term Capital Management, Louis Bachelier, margin call, market bubble, Marshall McLuhan, medical malpractice, merger arbitrage, Mikhail Gorbachev, money market fund, moral hazard, NetJets, new economy, New Journalism, North Sea oil, paper trading, passive investing, Paul Samuelson, pets.com, Plutocrats, plutocrats, Ponzi scheme, Ralph Nader, random walk, Ronald Reagan, Scientific racism, shareholder value, short selling, side project, Silicon Valley, Steve Ballmer, Steve Jobs, supply-chain management, telemarketer, The Predators' Ball, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, transcontinental railway, Upton Sinclair, War on Poverty, Works Progress Administration, Y2K, yellow journalism, zero-coupon bond
These people believe that derivatives act to stabilize the economy, facilitate trade, and eliminate bumps for individual participants.” On a micro level, Buffett wrote, these things often were true, but on a macro level, derivatives could someday cause midair collisions over Manhattan, London, Frankfurt, Hong Kong, and other parts of the globe. He and Munger believed that derivatives should be regulated, more disclosure should be required, they should be traded through a central clearinghouse, and the Federal Reserve should act as a central banker to the major investment banks, not just the commercial banks. Federal Reserve Chairman Alan Greenspan, however, defended the unregulated market and made sport of Buffett’s wariness.10 Buffett’s “financial weapons of mass destruction” was quoted everywhere, often paired with a question about whether he was overreacting.11 Even as early as 2002, however, the beginnings of mass destruction could be seen in the mobile-home industry.