JP Morgan

Recently, JP Morgan reported rather biggish losses due to only a few trades/positions. According to rumors, hedgefunds and speculators already took a piece of the cake, since positions are not closed yet. It's not completely known which these are, but apparently they involve the the IG9, a credit default swap index including 125 american companies. You can find more information on it at markit CDX and their product description page. Basically, it's one of the largest and most liquid CDS products. You would want to buy these products to hedge risk on bonds issued by the companies included in the index. Conversely you sell it, if you want to bet on the solvency of the companies. In this case, you get some money up front for selling it and a continuous payments during the contract period (10 years). As soon as a company fails to meet its liabilities, the total loss on the company is calculated, e.g. if the company recovers at 30% after filing for bancrupcy, the 70% loss is mutliplied by the weight of the company in the index (all have 0.8%) gives the amount of money you need to pay to cover for the losses.
Moreover, these products create a leverage and thus opens the possiblity to hedge delta trades by buying on the index. Apparently, this kind of trade caused the problems at JP Morgan. As far as I know, there is no easy access to these products using your everyday discount broker.

List of links to news regarding JP Morgans trade:

http://online.wsj.com/article/SB10001424052702303879604577412613778263918.html

A bit of Computation, Math and Psychology

• Some statistics: Verbal intelligence by demographic: blog post
  
• An implementation of reversible computation gates using crabs: article and paper
• blog post on the optimal base for a number system w.r.t to number of digits in base and length of numbers
• High performance correlation techniques for time series (watch out, .ppt file)

Models for Cognition: Belief vs Connectionism; links on writing style

There's an interesting article about the consequences of connectionist models for the theory of beliefs. I think it's interesting that one counterexample is taken as a proof for the non-existence of beliefs, whereas a lot of further contraints (for biological and evolutionary reasons) might apply to require the construction to be more uniform/unique.

Another set of links regarding style of writing papers/thesis: Nine cirlces of latex hell, essential guide to latex and a rant on Strunk's Elements of Style.

STOC Papers

A blog post with links to the accepted STOC 2010 papers. Quite some intesting topics!

On Human Brain Size; the Conciousness and Anaesthesia

A happy new year to all readers. I just got two articles with some references on further resources:

• Brain Size of Modern Humans is shrinking
• On the Workings of Anaesthesia

In near future, I will post some more math; I just haven't read all the things I stumbled on.

edit: let me squeeze in another link to an article:

Language learning is fast when words are connected with movements/gestures, which is also true for abstract words with no obvious gesture for it.

On (implementation issues of) Virtual Stock Markets

After my recent post on prediction markets, I decided to implement a small auctioneer for virtual stock markets with two parties making deals, i.e. not a market maker mechanism but a (traditional) double auction. But, despite the simple idea behind a bid/ask driven market, the implementation has to take into account quite a number of details: can you buy/sell one unit or multiple units of a good at a time? Does trading occur at discrete events or is it continuous? Is pricing uniform (all trade at the same equilibirum price) or discriminatory (individual matching of bid/ask orders)? And, if one the two options is chosen, how is the price determined?

• Beside the double auction system, bidding can take other forms: Auctions and Bidding: A Guide for Computer Scientists
• Everything you wanted to know about double auctions, but were afraid to (bid or) ask
• And finally a paper on two multi unit k-double auction algorithms

Futarchy: applying prediction markets

R. Hanson suggests to use prediction markets to make better use of information to evaluate strategies in politics. He calls the combination of democracy and speculative market information processing futarchy. There is a short manifesto and a full paper (PDF).

The central idea is: Use democracy to express what you want, use prediction markets to evaluate how to reach these goals. People can give strategies which are traded after paying a small fee; when they seem to be efficient the get a payback, otherwise they loose the fee. Thus good strategies are rewarded, bad ones are not rewarded but cost an extra fee. Augmented GDP and other indicators give a measured value to the state of the country.

Resources on Prediction Markets

Prediction Markets might be useful in modern politics - gathering crowd information (expected outcomes) and filtering experts from the crowd (i.e. successful traders in the market).

Just a bunch of links to read on the matter:

• Prediction Markets im Journal of Economic Perspectives.
• Combinatorial Prediction Markets at oddhead blog. Overview about types of combinatorial markets and the problems with handling them
• Betting on Ideas in Communications of the ACM
• Internet-Based Virtual Stock Markets for Business Forecasting

CSR Rating Agencies: What is Their Global Impact?

At SpringerLink's JOURNAL OF BUSINESS ETHICS you'll find an interesting article on CSR Rating Agencies: What is Their Global Impact?

Epigenetic Effects of Tobacco: Increased sensitivity for drug addiction

A continuously updated blog post on the effects of tobacco and modern additives to human brain/bodies.

I really don't understand why there isn't a huge debate about a reevaluation of all drugs under the guidelines of modern drug research instead of this "legalize everything" debate. Stuff like Krokodil (see some effects after usage, even once or a few times at the google image search but be advised: very graphic ..) just isn't anything you should offer to try even under the assumption that people are behaving rational.

Nuclear Energy: Thorium Reactors

I recently discovered a small gap in my education in nuclear energy. It concerns LFTR reactors. They seem to be reconsidered after uranium based reactors were favored after world war 2 and the during the cold war due to their dual use in energy production as well as the generation of byproducs for nuclear weapons.

There are several videos on the google tech talk channlel, just two of those:

Contemporary Physics

Just some physics stuff from recent news: An article at wired about recent findings at lhc/cern regarding the charge party violation and a confirmation about the (too) fast neurino measurements at the lhc.

CogSci: The Role of Dreams in Great Discoveries

An article from scientific american about an "alternative state of consciousness" we enter when dreaming, allowing us to tackle problems we cannot understand consciously

CogSci: A Map of the Brain

Just a quick link to a short TED talk.

CogSci: Embodied Cognition and Consciousness

Arguing against a Descartian dualism and for a interconnection between brain and body, the article at scientific american blogs gives nice pointers and references for an embodiment point of view of cognition. It's interesting to see if there is some "mind" kind of core in the biomachine that the human being actually is. The normal bio-chemic interconnection between mind and body seems to be quite natural as the mind needs the body to survive (and stay healthy) in order to do so itself.

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At the thoughts on thoughts blog you'll find a 3 part post on the possible functions of consciousness which is an interesting topic to think about, especially keeping in mind the aforementioned article:

• http://charbonniers.org/2011/10/20/possible-functions-of-consciousness-1-leading-edge-of-memory/
• http://charbonniers.org/2011/10/29/possible-functions-of-consciousness-2-gate-to-meaning/
• http://charbonniers.org/2011/11/04/possible-functions-of-consciousness-3-working-memory/

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[edit] Slightly related, there is another article on the work our subconscious does for us at the discovery magazine. [/edit]

Some Commentaries on Politics

Project Syndicate features some interesting articles and commentaries about politics.

Project Syndicate: the world's pre-eminent source of original op-ed commentaries. A unique collaboration of distinguished opinion makers from every corner of the globe, Project Syndicate provides incisive perspectives on our changing world by those who are shaping its politics, economics, science, and culture. Exclusive, trenchant, unparalleled in scope and depth: Project Syndicate is truly A World of Ideas.

It includes authors like Ban Ki-moon, Christine Lagarde, Javier Solana, Dominique Strauss-Kahn, Martin Feldstein, Otmar Issing, Peter Singer and many more.

Lego chess and caffeine

Some links for fun:

• giant lego chess robotors
• What Caffeine Actually Does

Some pointers to articles

Some pointers to news, papers and interesting announcements:

• Neural responses and consumption behaviour
  How concious are we when deciding about buying stuff?
  
  
• Efficient quantum memory for light
  A solid state quantum memory with higher efficiency than previous memory systems.
  

• Visualizations of the Ulam spiral
  Just some pictures/graphics.
  


• Manufactoria is a rather short but entertaining flash game.
  

Absolutly interesting are the DFG science tv webcasts which report on the DFG (DFG is the german equivalent of the NSF) funded projects.

In some German articles I was pointed to yet another book: The Road to Reality: A Complete Guide to the Laws of the Universe (Vintage) which I might read some time soon.

I finished reading Proust Was a Neuroscientist, a really enjoyable book. The author suggested to read Consilience: The Unity of Knowledge . I reading it currently (only up to page 100 yet) and it's somewhat between enjoyable and frustrating to read.

Search engines and market forces

Friedman claimed that if there's demand for some sort of goods or goods with special attributes (like being produced in an environtment-friedly process, by high paid workers, ...) the market will create adequate products - as long as demand means the willingness of the consumers to pay for that special property they request.

Some rather unknown examples or at least rarely used examples for this are "green" or CO2-neutral servers and online services. For search engines, there are several alternatives:

• Forestle promises to enable its partner, the US based organisation "The Nature Conservancy" to reforest 0.1 m^2 of rain forest for every search.
  
• Ecosia supports the WWF in protecting rain forest in Brasil, on average about 2 m^2 per search
  
  The backend of forestle and ecosia is provided by Bing and Yahoo. The operator for both is a for-profit organisation located in Berlin, Germany, which is bound by contract to invest at least 80% of its earnings in these rain forest projects.
  
  
• znout doesn't support anyone, but buys enough CO2-certificates to green-ify the power used by the servers in the search process. Its also the only search engine that uses google (the custom search provided by google)
  
• GoodSearch offers you to choose a US-based charity to give the money to - on average 0.01 USD per search. It features, among many others, amnesty international and the Richard Dawkins Foundation for Reason and Science. Its again a front-end to Yahoo search technology.
  

All search engine providers generate their money via advertisment on the search pages.

Epigenetics

I recently noticed that my knowledge on epigenetics is close to non-exsistent, so I decided to change that.

For entertainment, there is a documentation by BBC called "The ghost in your genes" which seems to cover the basic findings. I embed the first of 4 parts on youtube:


Moreover, there is an inaugural lecture by Professor Paro at the ETH Zürich.

There is also a bunch of papers in different levels of detail and specialization, I didn't read all of them yet:

• Jablonka, E. und Lamb, MJ. (2002): The Changing Concept of Epigenetics. In: Annals of the New York Academy of Sciences 891
  
• Bradbury, J. (2003): Human Epigenome Project—Up and Running. In: PLoS Biol.

I'll update this post as I discover and read more good resources on this topic.