Comments on: Adjustments in the News

By: Maverick

Maverick — Fri, 23 May 2008 02:55:52 +0000

They obviously failed to take into account the “urban over-heat island effect”. The island in question, of course, being Manhattan.

By: Dave Dardinger

Dave Dardinger — Thu, 22 May 2008 23:44:41 +0000

Fred,

so many adjustments . . . maybe they are really chiropracters, not climate scientists ?

Sounds familiar. Did someone once suggest that the Hockey Team could name themselves the Climopractors? Motto: Adjustments are us!

By: Joe Black

Joe Black — Thu, 22 May 2008 16:19:15 +0000

Climate “Science” (BH,ICS) is nothing without adjustments.

By: Fred

Fred — Thu, 22 May 2008 16:18:38 +0000

so many adjustments . . . maybe they are really chiropracters, not climate scientists ?

By: PaddikJ

PaddikJ — Thu, 22 May 2008 15:36:47 +0000

Maybe Moody’s will say that these errors occurred in reports that were written a long time ago and since then they’ve “moved on”.

Or that other agencies got the same results using different methodologies.

. . . or that, taken in aggregate, everything evens out, so what’s the big deal?

By: fFreddy

fFreddy — Thu, 22 May 2008 12:34:02 +0000

DBRS in all seriousness said that any instrument which can afford to pay Libor +2% can’t possibly be AAA.

Eminently sensible attitude.

By: stun

stun — Thu, 22 May 2008 12:26:51 +0000

Ah, but two of the models (Fitch and DBRS) couldn’t produce a AAA scenario never mind how much they fiddled with the initialisation criteria. DBRS in all seriousness said that any instrument which can afford to pay Libor +2% can’t possibly be AAA.

By: Steve McIntyre

Steve McIntyre — Thu, 22 May 2008 12:25:26 +0000

Both stock markets and climate influenced Mandelbrot – some of his comments on markets are relatively well-known; his comments on tree rings aren’t. But he looked at some of the tree ring series that we’ve discussed here. The Nile River series (Hurst exponent) is one of the first series studied for fractality. One of Mandelbrot’s most memorable images linked two aspects of fractal series (the 7 years of lean, 7 years of fat – Mandelbrot’s “Joseph Effect”) and the occurrence of huge anomalies (Mandelbrot’s “Noah Effect”). All expressed in not easy math, but, even without following the math, one can squint at some of the strange behavior of time series once i.i.d. Gaussian ceases to apply.

By: fFreddy

fFreddy — Thu, 22 May 2008 12:15:34 +0000

The problem was really just market “noise”.

The problem is the financial markets apparent blindness to the problem of kurtosis. (A mathematical term for “when the smelly stuff hits the fan, it does so all at once”.) Financial market movements do not follow a normal distribution, and have not done so at least since the 1987 crash – probably longer, for all I know.
And yet, all these silly credit instruments still work on the basis of gaussians, and everyone acts surprised when supposed thousand-year events continue to come along every five years.
Bah. Even sillier than “the market has no memory”.

By: Joe Black

Joe Black — Thu, 22 May 2008 10:43:08 +0000

Steve — when you gonna let this issue of the stick die? It must wake you from your sleep at night. Take care.

Eric,

It’s nearly impossible to do any cross checking without a hockey stick