Category: Economics

Math’s Beautiful Monsters


From fluid dynamics to finance, creatures like the Weierstrass function have challenged our ideas about the relationship between mathematics and the natural world. Mathematicians around the time of Weierstrass used to believe that the most useful mathematics was inspired by nature, and that Weierstrass’ work did not fit into that definition. But stochastic calculus and Mandelbrot’s fractals have proven them wrong. It turns out that in the real world—the messy, complex real world—monsters are everywhere. “Nature has played a joke on the mathematicians,” as Mandelbrot put it. Even Weierstrass himself fell victim to the trick. He created his function to argue that mathematics should not be based only on physical observations. His followers believed that Newton had been constrained by real-life intuition and that, once free of these limitations, there were vast, elegant new theories to be discovered. They thought that mathematics would no longer need nature. Yet Weierstrass’ monster has revealed the opposite to be true. The relationship between nature and mathematics runs deeper than anyone ever imagined.

Illustration : Alessandro Gottardo

→ Nautilus

That Time I Tried to Buy an Actual Barrel of Crude Oil


On how to buy, store and trade an actual pint of oil. Hilarious :

If gold is the equivalent of a pet rock, then I can confidently say that oil is the equivalent of playing host to a herd of feral cats; it demands constant vigilance and maintenance. If gathered in sufficient quantities, it will probably try to kill you, or at least severely harm your health.

• • •

The ideal oil storage trade works something like this: Buy the crude and immediately agree to deliver it at a later date, thereby locking in the difference between the spot and futures prices for what is, in theory, a riskless profit. In 2008, when the forward price of oil vastly eclipsed the spot price, this kind of arbitrage could net a hefty return.

A true oil storage trade therefore required an early buyer. The usual suspects—think Glencore and Trafigura—wouldn’t dream of touching my puny amount oil, of course. So I looked further afield, all the way to my ex-colleagues, who I thought surely must still harbor those long-ago dreams of owning Black Gold.

→ Bloomberg

Did High-Frequency Trading Answer The Call ?

But it brings back bad memories of the stock market crash of 1987 when some Nasdaq dealers simply wouldn’t pick up their phones. They knew the investors on the other end were looking to sell their stocks and as market makers, these dealers would be obliged to buy—and they didn’t want to buy! In the aftermath of that incident, enraged investors demanded that the SEC prevent it from happening again. The Commission responded by forcing changes on Nasdaq, including mandating that market makers respond to messages on the fully electronic Small Order Execution System.

Today, the fully-automated Nasdaq market, with its market makers often using HFT techniques, is the very model of an efficient market that has dramatically lowered costs for investors.

Contrast that with the findings of the joint government staff report on the US Treasury “flash rally” which found high frequency traders “as a group continued to provide the majority of order book depth and a tight spread between bid and ask prices throughout the day, even during the event window.” In short, HFT answered the call.

→ Traders Magazine

Activision to Buy Candy Crush’s King for $5.9bn

John Gruber on the acquisition :

They were only going to pay $1 billion, but then they got stuck on a couple of levels, bought some gold bars, and, well, here they are.

More to follow later today (maybe), but as a reminder, here’s a poignant statement from an indie developer allegedly ripped off by King.com :

Congratulations! You win! I created my game CandySwipe in memory of my late mother who passed away at an early age of 62 of leukemia. I released CandySwipe in 2010 five months after she passed and I made it because she always liked these sorts of games. In fact, if you beat the full version of the android game, you will still get the message saying “…the game was made in memory of my mother, Layla…” I created this game for warmhearted people like her and to help support my family, wife and two boys 10 and 4.

I have never downloaded nor played to any of their apps, I find them dumb and unaesthetic. In light of the previous statement I could only encourage you to remove them. 

Plus, I see mostly bored housewives or early teens playing Candy Crush, which makes the price of the acquisition even more insane. They are not real gamers like the core business of Activision-Blizzard, which is used to produce highly polished and immersive games. But I guess that’s where part of the money is to be made anyway and that’s sad. 

→ Financial Times

Is the Economy Really in Trouble? A Debate

¯\_(ツ)_/¯ :

But right now I’m stuck. I have no idea how the United States economy is doing. And the closer I look at the data, the more contradictory it looks.

• • •

I’ve tried several times in the last few weeks to convince myself that one of those stories is correct, but just can’t decide between them. And because The New York Times is not fond of headlines that include the “shruggie” emoticon (for the uninitiated, that would be ¯\_(ツ)_/¯), I have held off writing anything.


Why am I telling you all this? Because sometimes the most accurate portrayal of a situation revolves around uncertainty — and because we journalists aren’t always honest about that. This is my effort to be a little more honest.

→ The New York Times