Posts Tagged ‘derivatives’
“We shape our tools and thereafter our tools shape us”*…
By the late 1970s, workers on Wall Street were already using rudimentary email processes, putting them among the first to adopt personal computers outside of the sciences, academia, and home hobbyists, according to technologist David Wolfe. But finance’s love affair with computers really took off in the early ‘80s when spreadsheets arrived, and firms began providing in-house employee training for this tool—one that, even today, surprisingly few of us feel comfortable with.
At the time, those groundbreaking programs included VisiCalc—the first-ever digital spreadsheet, and “the ‘killer app’ for the Apple II,” [technologist David] Wolfe said—along with Lotus 1-2-3, which offered expanded capabilities in some areas, and similarly boosted IBM’s PCs.
According to Wolfe, co-director of the Innovation Policy Lab at the University of Toronto’s Munk School of Global Affairs and Public Policy, “The spreadsheet immediately started getting picked up by the financial services industry for its ability to do ‘what if’ calculations, like: If the rate changes from 1% to 2% percent, how will it affect my investment capital?”
Almost immediately, Wall Street also started using the technology to create new, more complex kinds of trading and investments. “It became an incredible time saver-tool, but also started to play into the creation of derivatives,” Wolfe explained…
Let it Visi-snow: “How the Invention of Spreadsheet Software Unleashed Wall Street on the World.”
* Father John Culkin, SJ (though often attributed to his friend Marshall McLuhan)
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As we copy and paste, we might send expansionary birthday greetings to Jean-Baptiste Colbert; he was born on this date in 1619. Minister of Finances of France from 1661 to 1683 under the rule of King Louis XIV, Colbert pursued dirigiste policies (those of a strong, directive state, e.g., tariffs, proactive industrial policy) to create a favorable balance of trade and to increase France’s colonial holdings and foreign market access. His policies inspired those of Alexander Hamilton, the first treasury secretary of the United States and foundational architect of the U.S. national economy.
“There’s nothing in the world so demoralizing as money”*…
The beginning of a MUCH longer infographic
This infographic was initially created to show how much money exists in its different forms. For example, to highlight how much physical cash there is in comparison to broader measures of money which include saving and checking account deposits.
Interestingly, what is considered “money” depends on who you are asking.
Are the abstractions created by Central Banks really money? What about gold, bitcoins, or other hard assets?
Since we first released this infographic in 2015, “All the World’s Money and Markets” has taken on a different meaning to us and many others. It’s a way of simplifying a complex universe of currencies, assets, and other financial instruments in a way that people can understand.
Numbers represented in the data visualization range from the size of the above-ground silver market ($17 billion) to the notional value of all derivatives ($1.2 quadrillion as a high-end estimate). In between those two extremes, we’ve added many other familiar measures, such as the GDP of California, the value of equities, the real estate market, along with different money supply metrics to give perspective…
See the infographic in its entirety– and ponder such take-aways as that the total of all derivatives outstanding today exceeds the total before the crash of 2008 the led to the Great Recession— at “All of the World’s Money and Markets in One Visualization.”
* Sophocles, Antigone
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As we batten down the hatches, we might send careful-calculated birthday greetings to Amartya Kumar Sen; he was born on this date in 1933. A polymathic economist and philosopher, he has made material contributions to welfare economics, social choice theory, thinking on economic and social justice, economic theories of famines, and indices of the measure of well-being of citizens of developing countries.
Sen’s revolutionary contribution to development economics and social indicators is the concept of “capability” developed in his article “Equality of What”. He argues that governments should be measured against the concrete capabilities of their citizens. This is because top-down development will always trump human rights as long as the definition of terms remains in doubt (is a “right” something that must be provided or something that simply cannot be taken away?). For instance, in the United States citizens have a hypothetical “right” to vote. To Sen, this concept is fairly empty. In order for citizens to have a capacity to vote, they first must have “functionings”. These “functionings” can range from the very broad, such as the availability of education, to the very specific, such as transportation to the polls. Only when such barriers are removed can the citizen truly be said to act out of personal choice. It is up to the individual society to make the list of minimum capabilities guaranteed by that society. For an example of the “capabilities approach” in practice, see Martha Nussbaum‘s Women and Human Development. [source]
Called the “conscience of his profession,” Sen was awarded the Nobel Memorial Prize in Economic Sciences in 1998; India’s Bharat Ratna in 1999 for his work in welfare economics; and in 2017, the Johan Skytte Prize in Political Science.
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