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‘An Anthropologist on Wall Street’ — Cultural Anthropology
Tett, Gillian. "‘An Anthropologist on Wall Street’." Theorizing the Contemporary, Cultural Anthropology website, May 16, 2012.

Anthropology can be extremely useful for understanding the contemporary financial world because of all the micro-level communities—or ‘tribes’ to use the cliché term—that are cropping up around the financial system....The event pulled together bankers from all over. They staged formalized rituals with PowerPoint presentations, but also engaged in informal rituals like chitchat in the wings.

As they came together and talked, these bankers were creating a network of ties. But they were also inventing a new language they felt made them distinctive from everyone else. The way they talked about credit was to emphasize the numbers and to quite deliberately exclude any mention of social interaction from the debate and discussion. In the first couple of days I sat there, they almost never mentioned the human borrower who was at the end of that securitization chain. They were also very exclusive. There was a sense that ‘we alone have mastery over this knowledge’....Part two of the CDO gospel was that bankers had had this sudden inspiration that they should stop concentrating credit risk and find ways to scatter it across the system....Looking back there were many elements of securitization that were evidently flawed. The tools bankers were using to disburse risk across the system were themselves very opaque and complex. The very way by which they disbursed risk was actually introducing new risk into the system.......fundamental contradiction at the very heart of the system that almost nobody spotted. Why not? To put it crudely, because there were too few anthropologists, using basic anthropological techniques, trying to understand what was going on. Having an anthropological perspective is very useful. The very nature of anthropology is to try to connect up the dots. That’s something that most modern bureaucrats, most bankers, and most company executives are not able to do, precisely because they’re so darn busy running around in their silos.
Wall_Street  Gillian_Tett  anthropologists  financial_system  securitization  finance  ethnographic  insights  CDOs  connecting_the_dots  cultural_anthropology  anthropology  tribes  silo_mentality 
march 2017 by jerryking
Crovitz: Tsunamis of Information - WSJ.com
MAR. 21, 2011 |WSJ| L. GORDON CROVITZ. Hayek spoke of the
'pretense of knowledge,' and why disasters are worse than expected. In
this information-saturated era, we expect no surprises. Yet we are
constantly surprised. We have huge amounts of data, so we assume that
risks can be calculated & avoided. But we also have exceedingly
complex systems. Just as weather is too hard to predict more than a few
days out because of how many variables interact, it's hard to predict
other complex systems. Consider credit instruments during the financial
crisis, the global warming debate, or global epidemics. Thus an
earthquake & tsunami, even in technologically advanced Japan, can
kill tens of thousands, wipe out entire villages, & re-open
questions about nuclear power....some physical systems turn out to be so
complex that they resemble unpredictable social sciences more than the
certainties of simpler physical science....We need to learn how to live
with both new technologies & new uncertainties.
disasters  complexity  Friedrich_Hayek  L._Gordon_Crovtiz  natural_calamities  information_overload  data  uncertainty  surprises  overconfidence  pretense_of_knowledge  earthquakes  tsunamis  social_sciences  certainty  psychology  unpredictability  compounded  risk-assessment  physical_systems  CDOs 
march 2011 by jerryking
Michael Lewis’s ‘The Big Short’? Read the Harvard Thesis Instead! - Deal Journal - WSJ
March 15, 2010 | WSJ | By Peter Lattman.

Back at Harvard, against the backdrop of the financial system’s near-total collapse, Barnett-Hart approached professors with an idea of writing a thesis about CDOs and their role in the crisis. “Everyone discouraged me because they said I’d never be able to find the data,” she said. “I was urged to do something more narrow, more focused, more knowable. That made me more determined.”

She emailed scores of Harvard alumni. One pointed her toward LehmanLive, a comprehensive database on CDOs. She received scores of other data leads. She began putting together charts and visuals, holding off on analysis until she began to see patterns–how Merrill Lynch and Citigroup were the top originators, how collateral became heavily concentrated in subprime mortgages and other CDOs, how the credit ratings procedures were flawed, etc.

“If you just randomly start regressing everything, you can end up doing an unlimited amount of regressions,” she said, rolling her eyes. She says nearly all the work was in the research; once completed, she jammed out the paper in a couple of weeks.
financial_system  Michael_Lewis  economics  Harvard  Colleges_&_Universities  students  thesis  CDOs  data  patterns  Wall_Street  investment_banking  women  Philip_Mudd  economic_downturn  linear_regression  finance  crisis 
march 2011 by jerryking

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