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Jedi2155

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http://www.theatlantic.com/business/archive/2013/09/how-bad-data-warped-everything-we-thought-we-knew-about-the-jobs-recovery/279923/

 

Just how bad are the data? Well, keep in mind that the jobs report's margin of error is supposed to be about 90,000. But these post-crisis seasonal errors have almost doubled it to about 170,000. That's right: the jobs report's real margin of error has been about as big as the average jobs report itself the past few years.

 

I feel the sudden need to kill a statistician at the Bureau of Labor Statistics.

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This is what happens when you use a moving average....and make the window way to small. Or just use windows period. Math seriously can distort a picture if used incorrectly.

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Their period was somewhere around 3 years. Since this is on a monthly basis it's probably 36 months. That's actually a rather large moving average from what I learned in my stats class. In general the issue becomes that no one in the BLS decided to look at their error, or worse yet they looked at it and just kept on going. I understand these people are in the real world and having to deal with large data sets and quite a bit of guesswork but there's no real excuse to double your error, especially when so many groups and several industries rely heavily on the data you come up with.

 

When I keep hearing the term "big data" being thrown around, it makes me wonder why we have certain incredibly crucial bits of data being so terribly smoothed that they're running into error as large as the data itself. If ever there was a time for technology and data to be used correctly this would be it.

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I'm not sure if this fits here but hell, we're in for another roller-coaster:

 

http://news.yahoo.com/us-borrowing-authority-exhausted-oct-17-151054701--finance.html

 

 

WASHINGTON (AP) — Treasury Secretary Jacob Lew said Wednesday the government will have exhausted its borrowing authority by Oct. 17, leaving the United States just $30 billion cash on hand to pay its bills.

[...]

 

The government reached its $16.7 trillion debt limit in May. Since then, it has been using "extraordinary measures" such as suspending U.S. investments in federal employee trust funds to create about $300 billion in additional borrowing room.

But on the 17th the government will be left with only its cash cushion and daily receipts to pay its bills. Lew warned that before long it would not be able to meet all of its obligations. Economists and financial market experts warn that the stock market could plummet and that investors would demand higher returns on Treasury notes, which could raise interest rates and harm the economy.

 

Ironically, I was reading a manga called "Akamatsu" which dealt with the Japanese economic downslide and how one crazy vigilante took it upon himself to dish out justice. Let's just say it was very much an R-rated manga in terms of content.

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In general the issue becomes that no one in the BLS decided to look at their error, or worse yet they looked at it and just kept on going.

 

I bet the latter is what happened. To change the way they looked at the data would require rewriting of the rules that everyone has been using for a long time but no one wanted to do it which is lame. Their only adjustment was in the error bars, which means the data was never "wrong" just became incredibly useless. So they wanted to do it the "by the book" method but as a result of the book sucking, they only still screwed everyone and themselves. This is the problem with bureaucracy. Its slow and usually antiquated and no one ever wants to take blame.

 

Ironically, I was reading a manga called "Akamatsu" which dealt with the Japanese economic downslide and how one crazy vigilante took it upon himself to dish out justice. Let's just say it was very much an R-rated manga in terms of content.

 

The US is already NC-17.

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http://qz.com/133695/96-8-of-trades-placed-in-the-us-stock-market-are-cancelled/

 

Although the SEC isn’t saying as much, experts think it’s a sign that high-frequency trading are flooding the market with orders, overwhelming the average retail or institutional investor. That’s particularly true in stocks traded on exchanges, says former high-frequency trader Dave Lauer. There, a full 99.76% of orders that were placed were never carried out.

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http://qz.com/138388/how-the-navy-seals-of-trading-are-taking-on-wall-streets-predatory-robots/

 

The team at RBC Capital soon developed a solution—a new trading technology dubbed THOR. To prevent high-frequency firms from jumping ahead of their trades, they staggered the timing of their orders to different exchanges. An order sent to NYSE, the farthest exchange, would go out without a lag, but the same order to a nearer exchange like BATS would be timed to go out microseconds later, so that they would arrive at all the exchanges simultaneously.

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http://www.floatingpath.com/2013/10/27/hft-shenanigans-nq-spoofing-mind-boggling-options-data/

 

http://www.floatingpath.com/2013/11/02/hft-shenanigans-options-exchanges-crash-algos-play-nice-fomc/

 

They do a weekly roundup on all the High Frequency Trading nonsense that goes on. It's interesting to read, but slightly depressing considering that financial regulators are either completely powerless or woefully incompetent with regards to these rather abusive business practices.

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So recently this has been making some half serious news. Credit Default Swaps are pretty much unregulated, but it gets a little bit shady when you have companies providing loans on the condition that other debt obligations be deferred so that you can collect on the Credit Default Swap you hold.

 

I have to admit it's times like this when I wonder just what the fuck the SEC and other regulatory agencies actually do. I mean if this isn't illegal, it should at the very least be made illegal so other "investors" don't start doing the same thing.

 

Daily Show Parody:

http://www.thedailyshow.com/watch/wed-december-4-2013/blackstone---codere

 

Bloomberg Source:

http://www.bloomberg.com/news/2013-12-05/blackstone-made-money-on-credit-default-swaps-with-this-one-weird-trick.html

 

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http://news.investors.com/politics-kuhla-malcolm/121213-682679-unemployment-remains-high-official-rate-falls-on-labor-force.htm?ven=rss&utm_source=dlvr.it&utm_medium=twitter&p=full

 

WEBjob121213.gif

 

I've heard about this for a while now, and although I cannot confirm numbers like this, I do believe we have an unemployment rate closer to 11% than the official reporting of 7%. The fact that we do not count underemployment and discouraged workers seems stupid and shortsighted.

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I agree with the whole under employment and discouraged worker aspect. To quickly check your graph though:

 

US population estimation by Year:

http://www.multpl.com/united-states-population/table

2007 July - 301.23 million

 

Labor Force Participation Rate by Year:

http://data.bls.gov/timeseries/LNS11300000

2007 July - 66.0%

Labor force in 2007: 198.8 million

 

For July 2013

LFPR in Jul 2013: 63.4%

Population in Jul 2013: 316.16 million

Labor Force in 2013: 200.4 million

 

Unemployment rate in July 2007:

http://data.bls.gov/timeseries/LNS14000000

4.7%

 

Calculated Expected Unemployment for July 2013: [1-(198.8*(1-0.047))/(316.15*0.66)]*100 = 9.2%

The math is as follows:

[2007 Labor Force * Employed Workers / (2013 Labor Force@2007 Rate)]

 

 

Not quite the 11% they're reporting but not very good either.

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Yeah I've seen more and more people talking about that last couple of years. I imagine there must be some critical point that we will reach in the near future or we will return to a society of just the rich and the poor.

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Even if you have no interest in cryptocurrency I suggest you read this article talking about the bitcoin protocol (not bitcoin itself). Very interesting set of developments.

 

http://finance.fortune.cnn.com/2014/01/21/bitcoin-platform/

 

Still in early development, BTC Swap is planned to facilitate a variety of what Middleton calls "Zero-Trust Digital Contracts," which recreate financial functions in software code by matching offered and desired transactions between parties without the need for intermediary institutions. Because these contracts are automated, instantaneous, and executed with assets already represented in the Bitcoin blockchain, Middleton says they eliminate counterparty risk while also subtracting conventional banking and brokerage fees.

 

TL;DR

You can eliminate brokerages for transactions without leverage.

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http://www.wired.com/wiredenterprise/2014/01/ethereum/

 

http://ethereum.org/

 

This is directly related to my previous post. It's another attempt at using the bitcoin protocol to create a network capable of handling everything from encrypted storage, derivatives contracts, and even identity systems.

 

Stuff like this is way more interesting to me than bitcoin, and I would be far more interested in becoming involved in these new currency systems.

 

I know this sounds incredibly ominous, but I do wonder if this is the next major step of the internet. Everything can be decentralized and confirmed by a huge network of miners that are rewarded with currency.

 

If I feel the need to post more about cryptocurrencies I'll create another thread.

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