High marks go out to economist Miles Kimball today. In the linked article above he holds himself publicly accountable for using Reinhart and Rogoff’s findings, and pledges to try to avoid such missteps going forward. Kimball’s humility is a breath of fresh air for a staid field, as Economists tend to stand by disproven theories, as if to do otherwise would remove all credibility. It should be just the opposite. Let’s hope that Kimball’s admission clears the air for others.
I don’t know about you, but I’m worn out. The seemingly relentless onslaught of bad news was hard to believe. While I have had a number of strong reactions to the week’s events, I don’t feel it’s time to go into them. Instead, I’ll ask you to keep those who’ve lost loved ones in your thoughts and, that you find ways to spread a little extra good in the coming weeks. We’re gonna need it. With that, let’s enjoy a song that, for me, is a pure expression of joy. It seems we’re due that bit of respite. Tomorrow, I’ll get back to booking my summer in Cambridge. (I can’t wait to get there so I can buy a round for the boys in blue.)
Given today’s news on Reinhart & Rogoff’s potential Excel blunder, this February post from The Baseline Scenario seems prescient.
But while Excel the program is reasonably robust, the spreadsheets that people create with Excel are incredibly fragile. There is no way to trace where your data come from, there’s no audit trail (so you can overtype numbers and not know it), and there’s no easy way to test spreadsheets, for starters. The biggest problem is that anyone can create Excel spreadsheets—badly. Because it’s so easy to use, the creation of even important spreadsheets is not restricted to people who understand programming and do it in a methodical, well-documented way.***
By James Kwak
I spent the past two days at a financial regulation conference in Washington (where I saw more BlackBerries than I have seen in years—can’t lawyers and lobbyists afford decent phones?). In his remarks on the final panel, Frank Partnoy mentioned something I missed when it came out a few weeks ago: the role of Microsoft Excel in the “London Whale” trading debacle.
The issue is described in the appendix to JPMorgan’s internal investigative task force’s report. To summarize: JPMorgan’s Chief Investment Office needed a new value-at-risk (VaR) model for the synthetic credit portfolio (the one that blew up) and assigned a quantitative whiz (“a London-based quantitative expert, mathematician and model developer” who previously worked at a company that built analytical models) to create it. The new model “operated through a series of Excel spreadsheets, which had to be completed manually, by a process of copying and…
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All the more reason to love Reggie Watts.
Published on Mar 13, 2013
http://ClimateRealityProject.org – Narrated by Reggie Watts. We are all paying the price of carbon pollution. It’s time to put a price on carbon and make the polluters stop the carbon destruction.