Compensation Run Amok

I have posted several times on the topic of compensation.

Donklephant links to a video of AIG's CEO on Charlie Rose. Ouch.

And now, the House has passed a bill taxing bonuses (to the tune of 90%) for people who get them from companies that received bailouts.

I know this is old news, but I'm still clearing out the long list of incomplete posts.

The Electoral College

I know it's April and the next presidential election is a long way away, but a few weeks ago, some crazy Iowans got my attention by trying to bypass the Electoral College.

The way I recall it, the founding fathers didn't really trust the unwashed masses to elect the right people, so they put in place the electoral college so that a group of people with a clue could choose the right President.

My big problems with the current system are

1. The election is over before it heads out West.
2. Presidents get inflated sense of mandate when they have a huge electoral college victory, but a narrow victory in terms of votes
3. The strategy that is mandated by the current system drives politicians to focus on a very small subset of the country. For instance, McCain focused on PA (not successfully) because it was his only hope.

I actually don't like Iowa's solution. I'd rather see one of the electoral college reform options put in place:

• The Congressional District Method is the method that Kansas and Maine use. Give the winner of your state's popular vote the two electoral college folks that correspond to the Senators, and divide up the rest according to congressional districts. This makes more sense to me than what the other states do, but it has its downsides.
• The Proportional Allocation Method divides up the state's electoral votes according to how the popular vote breaks down. No state is using this method.

No method is perfect, but the current system is pretty messed up. Folks like those at Fair Vote want to trash the Electoral College completely, but I like the constitution too much to support that. I don't think they have any chance of getting rid of it completely, but changing the way states allocate Electoral College votes is up to the states, makes sense, and is actually possible.

Music Monday: Giovanni

Giovanni Sample has some fun mash-ups. Some of my favorites are:

• Guakahal
• Dalai in the Storm
• Basicamente
• Bionic Man
  

I have liked mash-ups for a long time, but don't listen to enough of them. These pieces add a new aspect I haven't seen before: They are video mash-ups, which makes them visually interesting.

Three Stages of Couplehood

I know that I tend to avoid touchy-feely interpersonal topics, but here I go anyway....

To my eye, there seem to be three stages for any couple:

Stage 1: Hanging Out (AKA dating)
This stage is often full of drama, but the only people who really care and matter are the two people who are hanging out. Part of the point of this stage is ascertaining whether this couple should move on to the next stage, but that answer is often knowable early on, so most of the point is just about hanging out. When it doesn't work, you can just say "I break with thee, I break with thee, I break with thee" and throw dog poop on the other's shoes. Easy peasy.

Stage 2: Shacking Up (AKA getting married or living in sin)
At this stage, you find out if you are able to wake up next to the person every day. Can you figure out who does laundry and dishes? What food do you like? What shows do you like? Do your sleep schedules work together? At this stage, the stakes are higher than in stage 1: If it doesn't work out, then there is more emotional trauma and one or both of you needs to find a new place to live. Still, even if lawyers have to get involved, a complete breakup can be achieved in just a few weeks or months.

Stage 3: Being a Team (AKA Raising Kids)
This is where things get serious. Raising kids casts a bright, cruel light on your differences. If you and your partner don't share basic values, then raising kids together is going to be a challenge. I know couples who were great at stage 1 and stage 2, but then didn't do well at this stage. It's not that they were perfect couples that fell apart (no couple is perfect), but raising children has a way of discovering and amplifying problems. Opposites can make stages 1 and 2 really fun, but at stage 3 having unified values and big-picture strategy is key. Kids are common ground that cannot be divided.

I am amazingly lucky. I happen to be part of a tremendous team. By this I mean that I am mostly holding a clipboard while the coach and franchise player (Mrs. Kid fills both roles) do all the thinking and the real work. But seriously, we are in sync on just about every major decision (and even most of the minor ones). We have the same goals and fears for our kids and that makes everything else fall into place pretty well.

I have great sympathy for my friends who have found that their teams don't work so well. I tend to not blame one person or the other: It generally takes two to make it work or to get into a situation that does not work. Still, I feel for everyone involved.

[update: I realize that there is a fourth stage: denouement (AKA empty nest/retirement), but have no experience with this final stage, so I'll post an update in another couple decades]

The Meltdown Formula

Wired magazine brings us Recipe for Disaster: The Formula That Killed Wall Street.

So cool to see it.

This formula provides an answer to the question "What is the chance that two members of the same pool will default on their loans?"

The point of the equation is to calculate the probability that A and B both default in our time period. Investors used this equation to choose investments A and B so that this probability that they both default is as small as possible.

Most of the magic seems to lie in two places:

1. The probability distributions (the F variables), which describe how long each investment is likely to survive.
2. The correlation parameter (gamma), which describes how the two investment survival probabilities rise or fall together.

I could go into the mathematics of it all, but I will let the geeks among you check out the article. Basically, this formula helped people (like the folks at AIG's Financial Products group) setup credit default swaps and arrange packages of securities that were supposed to have well-balanced risks. If they had a risky investment they wanted to try, they could balance it by investing in something that had very small correlation with it. The problem is that when the base of the house of cards started to crumble, everything ended up having high correlation to everything else.

Anyway, it is interesting to see the actual formula. It feeds into my scepticism about people trying to push epistemological limits. Maybe we can't solve everything with equations. Just because you can associate a number with it, doesn't mean the number really has any meaning. These quantitative masters of finance thought they could control risk by associating formulas and numbers with everything, but ultimately risks can't be controlled by numbers.

No Time to Think

It has been quite a while since I have posted anything discussing current events. As I have said before, this blog is my chance to try to process events and information I find. In the past few weeks, I have been too slammed by work, community, and family obligations to be able to process information effectively. My mind is scattered by too much reading, editing, negotiating, and problem solving for my taste. I'll be happy when the insanity wanes.

I have eight unfinished blog posts waiting for my attention. They sit there on my blog dashboard reminding me of brief fragments of thoughts. I hope to return to them in the coming weeks.

In the meantime, here is one of the stragglers:

I read a haiku in the comics the other day. This was from the comic Get Fuzzy and was "written" by the dog Satchel.

One, two, three, four, five
Six, seven, eight, nine, ten, e-
-leven, twelve, thirteen

As Satchel's owner, Rob, said in response, "Technical perfection."

Music Monday: Interesting Music from Mad Dog

Mad Dog was one of my pledge brothers. When a freshman in college, he informed us all that he planned to become an MD/PhD who did research. I recently wanted to find him and put in a google search for his (pretty common) name and "MD PhD" and found him at the top of the results. According to his university page, Mad Dog's...

...research and clinical focus is hindbrain malformation syndromes, such as Joubert syndrome. In particular, his goal is to improve the specificity of pre- and post-natal diagnosis, identify genetic causes of the disorders, and evaluate the outcomes for individuals with hindbrain malformations. In addition, [he] is researching better regional access for immigrants and refugees with developmental disabilities and community access to child health to improve service delivery to children with developmental disabilities in non-English speaking families.

Wow. He's a brilliant and good man, but to me, he was always an independent thinker who had a killer record collection. I will never forget the sight of Mad Dog's record collection arriving at the house. It filled multiple trunks. Here is but a small sampling of some great music I heard about from Mad Dog:

Brian Eno
Albums: Another Green World, Before and After Science, Ambient #3 (with Laraaji)
Videos: I'll Come Running, Kurt's Rejoinder, The Dance No. 1
I am listening to The Dance No. 1 (from Ambient #3) and it has me rocking back and forth and smiling. It hits a spot in my soul that only really beautiful, minimalist music can hit. This was the ultimate studying music for me. Just let the music wash over your mind. Eno's ambient stuff has always worked for me, but his more popular stuff is really fun as well.

Peter Gabriel
Albums: [all the great early albums were unnamed]
Videos: Solsbury Hill, Games Without Frontiers, Biko
I feel like Peter Gabriel is a musical version of Mad Dog. A strong moral compass shines through in his work, but the music is still very accessible.

XTC
Album: Drums and Wires
Videos: When You're Near Me I have Difficulty, Ten Feet Tall, Helicopter
I love this band. Such happiness. They always did really great songs. Great hooks. Tremendous energy. Fun lyrics.

Various Artists
Album: Soundtrack of Urgh! A Music War
Videos: Driven to Tears, Madam Medusa, Ain't This the Life
For some reason, this is the iconic Mad Dog album for me. It was an amazing album with tons of great, progressive artists. It wasn't until about two years ago that I actually saw the movie. Some of it doesn't age well (e.g., Gary Numan, Klaus Nomi), but some of it still works (e.g., The Police, Steel Pulse)

Anyway, I send heartfelt thanks to Mad Dog. You set a high bar as a person and as an academic, but you also opened my ears to music. Just about all the good music I listen to can be traced back to your influence on my musical taste.