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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Mon 25 Sep 2006, 18:45:45

$this->bbcode_second_pass_quote('EnergyUnlimited', '')$this->bbcode_second_pass_quote('GoIllini', 'E')ntropy is a statistical law. In theory, if every atom went crazy and "decided" to move to one end of the room I'm in right now, entropy would decrease. However, since there are something on the order of 10^25th atoms in my room right now, the odds that all of them would head in the same direction at once are infinitessimal, but theoretically possible. Still, as we move towards optical computers and start being able to compute things using less energy, it may be one day theoretically possible to compute how to set up a situation that would reduce entropy.

Lets hope, that the same "wondersoftware" will allow you to work up set of winning numbers from next week National Lotery draw.
It is also a statistical problem, easy to deal with...


I wouldn't be suprised, given 1000 years more work. A bunch of MIT students 30 years ago managed to cheat at roullette by calculating where the ball was going to go. People thought it was impossible up until that point.

The good news is that calculating how particles interact isn't a complicated program for a computer to run. (For those that understand CS-speak, what I'm saying is that collision detection is an O(n^2) algorithm. It's not NP-complete, and we could theoretically do it on quadrillions of atoms, given enough technology. That's something I couldn't say about an O(2^n) algorithm.)

However, EJ says that it may still be impossible to reduce entropy. Not being a physics major, I'll defer to him.
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Tue 26 Sep 2006, 00:10:28

$this->bbcode_second_pass_quote('', 'T')he Clique Problem is NP-complete
The Subset Sum problem is NP-complete
(there are alot of other Np-complete problems and they can all be shown to be reducible to each other)

Yeah. My point was that some people I've met think that keeping track of atoms in a gas would be an NP-complete problem. It isn't. It's just collision detection, an O(n^2) algorithm.

$this->bbcode_second_pass_quote('ElijahJones', 'O')ddly, I'm actually working on some algorithm ideas for Subset Sum Problem right now.

Ah, Subset-Sum. Subset sum isn't NP-Complete if the elements can be reduced to integers If thats the case, the trick is that you need to:
1) Order the elements by size. Whether it's ascending or descending doesn't matter. Just pick some order.
2). Create a 2-d array of lists/linklists. Your x-axis represents the set of all elements up to the xth, and your y-axis represents the different integers they can possibly add up to.

Step 1) Fill in all table elements with y=0 with an empty list.
Step 2) Go through the elements. For the first element, fill in array element [0,y], where y=the subset sum element's value. Also, add that element to the linklist.
Step 3) Move on to the next subset-sum element. For each filled in y value of the previous subset-sum element, copy that array element over to this x-value, and also copy it over to this x-value, adding the old y-value to the new subset-sum element's value, and storing it in that new y-value.

This is a problem that gets asked as a homework problem in UIUC's graduate theory section more often than the undergrad section, so it's a bit of a tougher problem to solve, and it's even tougher to explain the answer to. Just remember that subset-sum-for integers is doable in O(t*n) time (t= target, n= number of elements in the subset) with a t x n memo table, and you should be on the right track.


$this->bbcode_second_pass_quote('', 'A')nd I would not be surprised if you were working on some kind of term paper by studying how the doomers respond to your contrarian ways. :-)

There was a guy who wrote abook actually after having frequented the peak oil sites for a few years. I forget his name.

Hehe. Actually, NP completeness is my favorite part of CS Theory, and that's what my senior thesis will probably be on. I'm thinking about either writing a paper on efficient algorithms for trading algorithm backtesting optimization issues (Which may run into NP-Completeness), or a paper on turning the integer reduction to O(P) time for subset-sum (discussed above) into a generic approximation algorithm that can be used to solve anything that Subset-Sum reduces from.

Unlike some of the fancier private school kids, us UIUC CS guys are pretty down-to-earth people. We think there's enough exciting and creative stuff going on within normal applications of CS that we don't have to do unusual social experiments to get extra notoriety for our work.
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Re: September OPEC Production Falls - Petrologistics

Unread postby max_power29 » Tue 26 Sep 2006, 05:48:50

HAHA! Goillini, you're still in school!? I knew it. Come back when you've lived in the real world a while and we'll see if you still have your ridiculous optimism for the house of cards. Yeah, business is good for the top elite CEOs. Everybody else is hosed. the middle class has been sold out and that includes the upper middle class. Only a few people get to be executives. Do you really believe you're going to be one of them because some east coast companies' P.R. firms are sending recruiters to your college? Just because they send recruiters does not mean they are hiring.

Perhaps you will get lucky and land a government job.
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Tue 26 Sep 2006, 11:25:16

$this->bbcode_second_pass_quote('max_power29', 'H')AHA! Goillini, you're still in school!? I knew it. Come back when you've lived in the real world a while and we'll see if you still have your ridiculous optimism for the house of cards. Yeah, business is good for the top elite CEOs. Everybody else is hosed. the middle class has been sold out and that includes the upper middle class. Only a few people get to be executives. Do you really believe you're going to be one of them because some east coast companies' P.R. firms are sending recruiters to your college? Just because they send recruiters does not mean they are hiring.

Huh. That's kinda funny because I already have a job offer from one of those investment banks as an analyst. (It's one of the nicer investment banks, too. You can know that I really do have a job offer from one because I can't discuss the actual name of the bank online without risking having my offer pulled, but you've definately heard of them.) If there's one problem with it, though, the company wants me to work in their financial algorithms division, and I want to work as a trader. Still, I get to work with a bunch of wonks from MIT, Stanford, and the Ivy League, and most people in even this division make six figures their second year out of college.

Again, I'm not a dummy. I'm a CS major at UIUC, and we've got a great engineering program like most Big-Ten schools. However, if a relatively smart middle-class kid like me can wind up getting to the same place rich Ivy-Leaguers and kids who can afford MIT get, anybody can. UIUC had a couple dozen CS majors head off to work for various NYC financial firms this summer, and the vast majority got the same offers the Ivy-League kids got. Also, many of those kids aren't as rich as you think. Many of them didn't get a dime of help from their parents and went $100K into debt to graduate. Others made it through on financial aid.

Please try not to make assumptions about me or the finance industry. I really don't like coming off as arrogant (Arrogance is an important thing to work on getting under control if you want to be a trader), and when you make assumptions about my situation that aren't true, I may wind up having to do that to make a point.
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Re: September OPEC Production Falls - Petrologistics

Unread postby DigitalCubano » Tue 26 Sep 2006, 12:39:03

$this->bbcode_second_pass_quote('GoIllini', 'H')ehe. Actually, NP completeness is my favorite part of CS Theory, and that's what my senior thesis will probably be on.


I can chart my time in grad school by my disposition to complexity theory. ;-) My first class in grad school was Intro to the Theory of Computation with Mike Sipser. Talk about baptism by fire. Wow. School never drove me to drink until that midterm. Fortunately, there was a curve and enough people were in the same boat (i.e. undergrad engineers moving into a CS/Applied Math field). Then I took some OR classes and ran into complexity theory yet again, This time I was intrigued. Then I wrote a chapter on it for my Master's (an approximation search-based algorithm for an NP Integer Program). Now I'm considered an "expert" on the OR side of the issue (yeah right...). Life takes some strange turns. Good luck with your senior thesis!

Anyhow, I'm chompin' at the bit for the quantum computing era. P=NP? Who cares when you actually have a nondeterministic machine at your disposal? :-)
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Re: September OPEC Production Falls - Petrologistics

Unread postby EnergyUnlimited » Tue 26 Sep 2006, 13:00:31

$this->bbcode_second_pass_quote('galacticsurfer', '
')Except for the 3000 families with wealth of over $100 million the rest of the USA are losing income and stretching their consumption by increasing debt. The situation is so near to 1929 situation it is not funny. Huge debt and wide income disparities before a massive crash under a super conservative government with a hands off attitude to business.

Too pesimistic viev.
There will be at least 1 million of families in the US who are not more than $1-3 million rich by assets, with no credit card debt (other than a balance to be paid next month in full) and with no mortgage or another loan to pay.
However this kind of peoples are keeping quiet, go on with their life and sometimes complain in the pub as need arise "how tough life is".
Please, do not try to be so overtly pessimistic.
Life is not as bad as that.
I know it for myself.
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Tue 26 Sep 2006, 13:40:28

$this->bbcode_second_pass_quote('DigitalCubano', '')$this->bbcode_second_pass_quote('GoIllini', 'H')ehe. Actually, NP completeness is my favorite part of CS Theory, and that's what my senior thesis will probably be on.


I can chart my time in grad school by my disposition to complexity theory. ;-) My first class in grad school was Intro to the Theory of Computation with Mike Sipser. Talk about baptism by fire. Wow. School never drove me to drink until that midterm. Fortunately, there was a curve and enough people were in the same boat (i.e. undergrad engineers moving into a CS/Applied Math field). Then I took some OR classes and ran into complexity theory yet again, This time I was intrigued. Then I wrote a chapter on it for my Master's (an approximation search-based algorithm for an NP Integer Program). Now I'm considered an "expert" on the OR side of the issue (yeah right...). Life takes some strange turns. Good luck with your senior thesis!

Anyhow, I'm chompin' at the bit for the quantum computing era. P=NP? Who cares when you actually have a nondeterministic machine at your disposal? :-)


Hehe. The CS guy in me still suspects that the complexity of keeping three quantum units together is twice what keeping two is, and keeping four is twice keeping three, and that somehow, it's O(2^n) work to keep a quantum computer with n units together. I mean, you can solve an NP-complete problem in O(1) time if you have O(2^n) computers. :)
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Re: September OPEC Production Falls - Petrologistics

Unread postby Kez » Tue 26 Sep 2006, 14:18:37

$this->bbcode_second_pass_quote('GoIllini', 'H')owever, aside from the fact that we are losing manufacturing capacity in some areas, the economy is fundamentally stronger than it's ever been.


If your checking account constantly gets smaller, and the only way to make it bigger is to take out more loans and add that money to the account, would you think of that as a strong economic system? Of course not, especially since there is zero indication in my lifetime that there will be a positive trade balance.

You can talk about wealth, land, services, property - whatever, all you want, but the fact is that our GDP is only going up because we are adding money to it that is being taken from the future. In reality the GDP goes down every month by billions because of the trade deficit.

It isn't simply funny money or play money either. If you don't pay for your house the bank will come and take it - now you're screwed today, AND in the future. If you don't pay your car payment the dealership will steal it back from you. If the US doesn't pay its T-Bills, China and the rest of the world will stop buying them.
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Re: September OPEC Production Falls - Petrologistics

Unread postby markam » Tue 26 Sep 2006, 15:15:13

$this->bbcode_second_pass_quote('', 'N')ot sure about that. When the industrial revolution started, people said that, at the end of the day, it was land and the produce of the land what the economy was based on.


They were right, but they used produce of the land in place of the real input, energy. Every item that is manufactured, every service performed, every item of food grown, is based upon a unit input of energy. As the energy inputs grew because of fossil fuels, the outputs of goods and services increased. This shows as an increase in GDP, but GDP is really a measure of energy input.

Ingnoring the fact of depletion, the American growth of GDP because unsustainable the moment we started using more energy than we produced. Our growth has continued for the past 35 years, only because every country in the world has been willing to accept our currency as input. So instead of growing our energy inputs, we have been growing our currency inputs and taking energy inputs from other countries. These inputs have been both in the form of direct energy inputs, and indirect inputs (goods/services).

This path is unsustainable, and will collapse in the near future. There is no excess of world energy which can be given to us now (which had previously been given at the expense of the citizens of other countries). When the dollar collapses (which it will have to), the US GDP will rapidly collapse to the level which can be supported by the energy inputs to the system. At the present time, that is probably about 50-60% of current levels.

Anybody who thinks the US economy is healthy and the future is bright has no understanding of what makes the world work. They will be in for a very rude awaking in the near future.
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Re: September OPEC Production Falls - Petrologistics

Unread postby dr_doom » Tue 26 Sep 2006, 16:31:44

$this->bbcode_second_pass_quote('', '
')Let's say I have a mortgage. It's worth $100K. I can make money by selling it as mortgage-backed bonds to investors for a total sum of $101K, and agreeing to give them any cash flows from the mortgage. At the same time, if the mortgage defaults, I'm not liable. So how the mortgage works no longer affects me. However, we've just gone from having $100K worth of securities to having $201K.


I've heard someone in banking give me this explanation before.
I'm not convinced it makes a case for derivatives being a good thing. Warren Buffet one of the world's richest men isn't convinced either it seems, when he described them as "weapons of mass financial destruction", but what does he know?

My concern with derivatives is that banks are creating them out of thin air to manipulate world markets, in very much the same way they create paper money for the same purpose. However they have much more power because they can be created and destroyed much quicker than paper money, and in virtually infinite volumes.

There is a group called GATA, that make the case that the physical gold market has been ruthlessly manipulated downwards since the spike in 1980. In order to dominate the world economy with dishonest debt-based paper currencies, which the central banking cartel controls.

Why could this be a problem? There is some evidence to suggest the central banks have actually run out of physical gold, at the moment their keeping the game going by selling gold derivatives, based on gold which doesn't actually exist. This satisfies hedge fund demand etc. As soon as the physical segment of gold demand starts to outstrip physical supply, that's when there could be a serious problem. The dollar and world fiat currencies would not so much collapse, as evaporate.



$this->bbcode_second_pass_quote('', '
')Additionally, you have to remember that for every person on one side of a derivatives transaction, there's someone on the other. Value just can't go up in smoke like it can when people buy stocks on margin.


I'm missing the point you're making here, how is there not two parties involved in a stock transaction?

Isn't geared derivative speculation "on margin" also common practice now, hedge funds are famous for it.

It was also how LTCM got into trouble, and had to be bailed out with public money?
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Re: September OPEC Production Falls - Petrologistics

Unread postby shortonoil » Tue 26 Sep 2006, 17:41:31

markam said:

$this->bbcode_second_pass_quote('', 'A')nybody who thinks the US economy is healthy and the future is bright has no understanding of what makes the world work. They will be in for a very rude awaking in the near future.


Corporate and governmental bond issuance in the US is presently $47 trillion and growing by $3 trillion per year. To service this debt requires the creation of over $2 trillion per year in new funds. That money is brought into existence when debt is assumed. That is the bases of a fiat, debt based currency. When the point is reached that not enough new debt is brought into existence to service the existing debt, the system collapses. For the last five years the housing market has been contributing $3.7 trillion per year to this debt formation process. Depending on the scale and rate of the present housing market decline, the point when collapse occurs could be in as little as two years. The 3000 + fiat currency systems that have been used from the beginning of history, have one commonality. They all collapsed at some point.

"Paper money eventually returns to its intrinsic value: zero." --Voltaire 1761
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Tue 26 Sep 2006, 19:00:37

$this->bbcode_second_pass_quote('dr_doom', '
')I've heard someone in banking give me this explanation before.
I'm not convinced it makes a case for derivatives being a good thing. Warren Buffet one of the world's richest men isn't convinced either it seems, when he described them as "weapons of mass financial destruction", but what does he know?

Actually, he doesn't know much about derivatives. He did finance before derivatives became popular (The CBOE in the '70s and various other derivatives in the '80s.), and he never worked in banking. The reason he's against them is that his traders didn't know what they were doing and lost one of his insurance companies a few hundred million to various traders on Wall. St. Frankly, I'd avoid derivatives if I didn't know how to make money on them, too. (To be honest, I don't know how to directly make money on them, but Warren Buffett's losses probably helped pay my salary this summer.)

$this->bbcode_second_pass_quote('', 'M')y concern with derivatives is that banks are creating them out of thin air to manipulate world markets, in very much the same way they create paper money for the same purpose. However they have much more power because they can be created and destroyed much quicker than paper money, and in virtually infinite volumes.


All trades have to go through a clearing firm, and have margin requirements. Unless I have physical assets to back them up (IE: If I have 1000 barrels of oil in storage at Cushing, I can sell an oil contract without a margin), I need more capital as margin to "create securities out of thin air" than a bank needs to "create money out of thin air".

The vast majority of trades out there are backed by real assets.

$this->bbcode_second_pass_quote('', 'T')here is a group called GATA, that make the case that the physical gold market has been ruthlessly manipulated downwards since the spike in 1980. In order to dominate the world economy with dishonest debt-based paper currencies, which the central banking cartel controls.

You can find a lot of groups with very interesting ideas on the internet. Having said that, why does it matter? Even gold is a fiat currency. Look! A shiny metal that doesn't do me any good.

$this->bbcode_second_pass_quote('', 'W')hy could this be a problem? There is some evidence to suggest the central banks have actually run out of physical gold, at the moment their keeping the game going by selling gold derivatives, based on gold which doesn't actually exist. This satisfies hedge fund demand etc. As soon as the physical segment of gold demand starts to outstrip physical supply, that's when there could be a serious problem. The dollar and world fiat currencies would not so much collapse, as evaporate.

This sounds like a conspiracy theory to me. In any case, somebody's always willing to sell anything at the right price. If Satan's short souls and needs to cover, he'll be able to find a few traders to sell him theirs'.

But the fact is that most derivatives don't have traders betting wildly. It's usually traders who buy Chevron and short oil. Traders who determine that the Black-Scholes price of an option is lower than the market price, and sell $50 calls and buy $70 ones just-in-case.

$this->bbcode_second_pass_quote('', 'I')'m missing the point you're making here, how is there not two parties involved in a stock transaction?

Isn't geared derivative speculation "on margin" also common practice now, hedge funds are famous for it.

It was also how LTCM got into trouble, and had to be bailed out with public money?
My point is that the markets have never failed, and 1929 was caused by the fact that investment money just got taken off the table. Money gets taken out of the markets when investors decide that valuations are too high or the money supply gets reduced. 1929 was a combination of both; same with 2000.

Let me also make another claim: If everyone randomly decided to get out of derivatives and got into equities, fixed income, commodities or whatever real assets they liked to invest in, it would only hurt the market by making it less efficient. The DJIA would remain around 11000-12000. People who were looking for certain risk profiles would have a harder time finding them, but the actual economy wouldn't be hurt, short-term, by such a change.
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Re: September OPEC Production Falls - Petrologistics

Unread postby dr_doom » Tue 26 Sep 2006, 20:10:23

$this->bbcode_second_pass_quote('', 'A')ctually, he doesn't know much about derivatives. ...


Yeah, he's an old fool. Obviously I shouldn't make arguments which there are possible counter-arguments for.


$this->bbcode_second_pass_quote('', 'T')he vast majority of trades out there are backed by real assets.


So your position if I understand it correctly. You accept there is some derivatives fraud going on, but the majority of trading activity is based on real assets. You're quite possibly right.

I still find the situation with gold in particular worrying. There is apparently six times as much paper (derivatives) gold, than there is physical gold, in circulation.


$this->bbcode_second_pass_quote('', 'Y')ou can find a lot of groups with very interesting ideas on the internet. Having said that, why does it matter? Even gold is a fiat currency. Look! A shiny metal that doesn't do me any good.


In the last 1000 years or so, gold has more often than not been acceptable as a currency with 'intrinsic' worth. Only in the past 30 or so years, in which we've had an 'oil-backed' world reserve currency has this seemed to become no-longer the case. To say paper has the same intrinsic value as gold is an absolute joke.





$this->bbcode_second_pass_quote('', 'T')his sounds like a conspiracy theory to me. In any case, somebody's always willing to sell anything at the right price. If Satan's short souls and needs to cover, he'll be able to find a few traders to sell him theirs'.


Yes I love conspiracy theories.

Alan Greenspan has testified twice before congress saying: "central banks will lease gold in increasing quantities should the price rise". This is the same Alan Greenspan that wrote books in the 60s praising the gold-standard as a force for economic freedom, and the best defence against deficit spending as a vehicle for wealth transfer.

He stopped talking about these things after being appointed head of JP Morgan.


$this->bbcode_second_pass_quote('', '
')But the fact is that most derivatives don't have traders betting wildly. It's usually traders who buy Chevron and short oil. Traders who determine that the Black-Scholes price of an option is lower than the market price, and sell $50 calls and buy $70 ones just-in-case.


What is the point you're making here. Traders usually make money? Yes probably.



$this->bbcode_second_pass_quote('', 'M')y point is that the markets have never failed, and 1929 was caused by the fact that investment money just got taken off the table. Money gets taken out of the markets when investors decide that valuations are too high or the money supply gets reduced. 1929 was a combination of both; same with 2000.


Yes a combination of both in the sense: "oh I'm being forced to pay my borrowed money back, therefore I have to sell my stock". It's pretty obvious how the market would react when this happens to everyone at once.

Not that it's at all predictable how history is repeating itself in the US & global housing market.



$this->bbcode_second_pass_quote('', '
')Let me also make another claim: If everyone randomly decided to get out of derivatives and got into equities, fixed income, commodities or whatever real assets they liked to invest in, it would only hurt the market by making it less efficient. The DJIA would remain around 11000-12000. People who were looking for certain risk profiles would have a harder time finding them, but the actual economy wouldn't be hurt, short-term, by such a change.

Personally I lump, equities, fixed income, and derivatives together for investment purposes.

They are all 'paper' promises. With equities you could make the case that the paper you are buying is linked to tangible assets, but personally I wouldn't put my money there. With the amount of manipulation that can and does go on inside companies, with regard to hiding debt, cooking the books, etc. Plus if currency debasement is going on, which it is, your investment needs to keep up with that just to stay level in real terms.

My personal opinion is that the highest 'risk-profile' anyone can adopt with regard to safe-guarding their wealth is to have all their assets tied up in the afore-mentioned things. Bad inflation could wipe out the value of these in an instant. Even tangible assets such as housing isn't safe because it has been inflated so much by excessive lending, which most people need to buy a house.

I think the point you seem to be making, if people suddenly woke up en-masse and decided they didn't have confidence in paper currency, paper investments, derivatives, etc. And wanted to own tangible assets (such as gold). The worst that could happen would the market would become "less efficient".

Personally I think the worst that could happen would be global hyperinflation, but time will tell whether that transpires or not.
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Re: September OPEC Production Falls - Petrologistics

Unread postby GoIllini » Tue 26 Sep 2006, 21:49:23

$this->bbcode_second_pass_quote('dr_doom', 'Y')eah, he's an old fool. Obviously I shouldn't make arguments which there are possible counter-arguments for.

He's not a fool, but his claim (which you cite out of context) came from his annual report where he explained why his company lost money on derivatives, and why it was foolish for Berkshire Hathaway to be involved in a market it didn't understand. Derivatives can be a dangerous game to play if you don't know what you're doing, and they definately hurt Berkshire-Hathaway. That was his complaint.


$this->bbcode_second_pass_quote('', 'S')o your position if I understand it correctly. You accept there is some derivatives fraud going on, but the majority of trading activity is based on real assets. You're quite possibly right.

No, I'm claiming that the vast majority of trades are backed by something, such that no matter which way the derivative goes in price, the trader's safe. For example, a mortgage bond would be backed by a mortgage.

Some traders do short derivatives. They're required to have pretty huge margins. Those trades aren't necessarily backed by the underlying security; just by the trader's margin. This is especially common in futures markets, where the system and the trades have been pretty much the same for the past 100 years.

$this->bbcode_second_pass_quote('', 'I') still find the situation with gold in particular worrying. There is apparently six times as much paper (derivatives) gold, than there is physical gold, in circulation.

There isn't enough gold in existence to run the economy these days. The way I see it is that gold and money are sorta like lubricant oil for a machine, but one's natural and one's synthetic. With an economy of our size, it's impossible to run it on precious metals alone. That doesn't mean there's something fundamentally wrong with the economy; it just means that there isn't enough gold in the earth's crust to support how the economy is currently running.


$this->bbcode_second_pass_quote('', 'I')n the last 1000 years or so, gold has more often than not been acceptable as a currency with 'intrinsic' worth. Only in the past 30 or so years, in which we've had an 'oil-backed' world reserve currency has this seemed to become no-longer the case. To say paper has the same intrinsic value as gold is an absolute joke.

IMHO, the only things that have intrinsic value are equities and useful commodities. Gold is not a useful commodity. It won't run my car. I'd be foolish to try to use it to build my house or an office building. It only has a few industrial uses.

IMHO, the USD should be backed by reactor-grade uranium.


$this->bbcode_second_pass_quote('', 'Y')es I love conspiracy theories.

Alan Greenspan has testified twice before congress saying: "central banks will lease gold in increasing quantities should the price rise". This is the same Alan Greenspan that wrote books in the 60s praising the gold-standard as a force for economic freedom, and the best defence against deficit spending as a vehicle for wealth transfer.

He stopped talking about these things after being appointed head of JP Morgan.
This may very well be possible, but the recent drop in gold prices can't fully be explained by central banks dumping gold. Besides that, you really can't do a multi-billion dollar transaction without word getting out.


$this->bbcode_second_pass_quote('', '
')What is the point you're making here. Traders usually make money? Yes probably.
My point is that the derivatives you buy on the stock market are almost always backed by something that moves with the price of that derivative.



$this->bbcode_second_pass_quote('', 'Y')es a combination of both in the sense: "oh I'm being forced to pay my borrowed money back, therefore I have to sell my stock". It's pretty obvious how the market would react when this happens to everyone at once.
And my point is that with stuff like derivatives, which ultimately depend on the value of the underlying asset, you're not going to have a stock market crash unless the underlying assets are way overvalued or people need to pay borrowed money back. Derivatives really don't do anything but let investors get the risk profiles they want.

$this->bbcode_second_pass_quote('', 'N')ot that it's at all predictable how history is repeating itself in the US & global housing market.
You're right. 1929 had several components. Some may have been the housing market and credit issues, but more importantly, it had to do with stock valuations and debt that investors were taking on.

At a typical P/E of around 12-15, the stock market is not overvalued. Because of that fact, I'll be able to sleep well, tonight.


$this->bbcode_second_pass_quote('', 'P')ersonally I lump, equities, fixed income, and derivatives together for investment purposes.

They are all 'paper' promises. With equities you could make the case that the paper you are buying is linked to tangible assets, but personally I wouldn't put my money there. With the amount of manipulation that can and does go on inside companies, with regard to hiding debt, cooking the books, etc. Plus if currency debasement is going on, which it is, your investment needs to keep up with that just to stay level in real terms.
With lots of people out there robbing people, would you rather hide gold under a mattress?

Having money always has its risks. It's just as likely- if not moreso- that someone who keeps his money at home gets robbed as it is that a company pulls an Enron or WorldCom (this hasn't happened for a few years).

$this->bbcode_second_pass_quote('', 'M')y personal opinion is that the highest 'risk-profile' anyone can adopt with regard to safe-guarding their wealth is to have all their assets tied up in the afore-mentioned things. Bad inflation could wipe out the value of these in an instant. Even tangible assets such as housing isn't safe because it has been inflated so much by excessive lending, which most people need to buy a house.
True. However, borrowers seem to be getting a bit of a reprieve now, from the fed.

$this->bbcode_second_pass_quote('', 'I') think the point you seem to be making, if people suddenly woke up en-masse and decided they didn't have confidence in paper currency, paper investments, derivatives, etc. And wanted to own tangible assets (such as gold). The worst that could happen would the market would become "less efficient".
My point is that many on this forum allege there is a derivatives bubble. If investors up and decide that there is a derivatives bubble, take their money out of derivatives and put it in stocks, bonds, and commodities with similar investment profiles to what they had earlier, the market would be unaffected.

Should investors decide that the world's gone crazy and pull their money out of the stock market, valuations will be too tempting for other investors to stay out of the market.
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Re: September OPEC Production Falls - Petrologistics

Unread postby Dezakin » Wed 27 Sep 2006, 03:56:06

$this->bbcode_second_pass_quote('ElijahJones', 'I') know there is a polynomial time primality test (probability based),

Thats the one everyone uses. Theres a deterministic algorithm covered recently in 'Primes in P'
$this->bbcode_second_pass_quote('', 'b')ut even that is not the holy grail because we have finite data storage with time restrictions on the moving of data, so even if you use a linked list the natural numbers still outdo us. There will always be (it appears) a number too large to be factored. But for cypto freaks it is sort of an arms race. If P=NP then there is a polynomial factorization algorithm and the amount of time and effort neded to factor a number is comparable to the time required to verify the factors.

Its not known that factorization is an NP complete problem, and I rather strongly suspect it isn't.
$this->bbcode_second_pass_quote('', 'T')hen, well, you know what that means. We would then be having to shift our confidence away from the apparent built in firewall solely to secret advances in computing power etc. Protecting incrypted data would require making sure only authorized people had access to the types of systems that encrypted it and that they were embedded in wet-ware systems to complex to allow cheating. I would hate that world, and in the end it might destroy the whole notion of military level encryption. However it seems likely that P >< NP.

If P=NP that doesn't spell the end of crypto necissarily. There are larger complexity classes and we might just as well do problems in exp time, and its not even know if integer factorization is within NP yet. In fact its very doubtful that it is NP complete because of some dubious implications about complexity classes in general. So P=NP has very little to do with factorization based crypto.

Even if there were a factorization algorithm in P and P=NP, there are a number of other problems that are potentially usable for crypto.

Edit:

I retract this assertion after reviewing the implications of P=NP. It potentially screws crypto until you can construct quantum computers and assert that quantum P != quantum NP problems.

If the P exponent is high enough also for the general algorithm, P=NP doesnt really matter all that much either...
$this->bbcode_second_pass_quote('', 'B')ut the light that drew me like a moth to this was Chaitin's Omega Number and the realization that he used a diophantine equation in 15000+ variables to represent the universal turing machine. See so now the whole field of computation theory has been mapped into my favorite subject (and secret obsession), elementary number theory.

I'm not sure how this is all that special. You can embed number theory in set theory and lamda calculus in set theory also, and this has been known for many decades.

$this->bbcode_second_pass_quote('', 'A')nd unless chaitin's diophantine equation is very exceptional among other possible equations, computability theory is shown to be a proper subset of elementary number theory. That in fact is how Chaitin is able to extend Godel and discover his Omega Numbers.
From reading his stuff it seems like hes pulling a Penrose and reading way too much philosophical nonsense out of mathematical statements, but sure its interesting stuff.

$this->bbcode_second_pass_quote('', 'S')o it appears that discrete mathematics is sufficient to describe every machine, even biological ones. Is it also sufficient to describe every natural phenomenon?
Well, yah.
$this->bbcode_second_pass_quote('', 'S')ome would say that force fields are continuous. But if they are moderated by particles they cannot be continuous? Some would say that time is continuous, but if time is simply the recognition of change in state then again we are back to a quantum time. From a math perspective that leaves us in a dilemna, mathematically at least the continuum is well defined and we have notions of sets even larger than that.
This is dependant on the axiom of infinity at the very least. You can do nearly all normal mathematics constructively without infinity or choice. You really only need the axiom of infinity for playing around in cantor's nonsenseland. Hilbert can go and play there all he wants, but we don't need any of it.
$this->bbcode_second_pass_quote('', 'A')nd yet the rational numbers are dense in the reals, meaning they are sufficient for all applied uses of mathematics. Pi exists in theory, but we can never prove that it exists in the real world because to do so would require validation of a model of the universe to infinite accuracy. Accuracy is forever a notion associated with rational numbers. The other component is space (dimensionality) but linear algebra works with any number field, and how convenient that the rational numbers are a field? So it is all very fascinating. Some would say, if real numbers to do not exist in the physical universe how are we able to comprehend them?
The same way we comprehend other constructs of logic. We invent sets that have a cardinality between reals and integers when assuming the negation of the continuum hypothesis. They're just toys.

$this->bbcode_second_pass_quote('', 'T')here is a mystery there. I think some philosphers of the past have suggested that our ability to apprehend real numbers but never actually master them suggests there is a spiritual component to the universe. We say they exist because our reason implies them, but we can never mechanically verify their existence in the natural world.
We don't have to assume they exist at all. Or rather we dont have to assume that a set with a cardinality greater than omega has to exist. For that you need infinity and power set, and you can chop one of those out at will without really hurting number theory.

$this->bbcode_second_pass_quote('', 'S')o what world do real numbers belong to? if one removed the rational numbers from the reals and dealt only with the irrational numbers, do we still have a field? Can we still do all the things we do when the rational are present.
You're looking for an extention of the integers with the same cardinality as the integers but with square roots and stuff? No problem.

$this->bbcode_second_pass_quote('', 'f')or that we would need a dense subset of irrational numbers that is closed under arithmetic, but look Pi/2 *2/Pi = 1. So automatically assuming the existence of an irrational field is easily shot down. But I do suspect that if you were to use an irrational base for numbers you might be able to construct such a field. Again though to us, infinite accuracy is unattainable.
Still totally unnecissary also.

$this->bbcode_second_pass_quote('', 'B')ut what does the existence of all of these numbers, including the Omega Numbers actually mean? How can we concieve of something that is not somehow a possibility within the physical universe? Why are we able to pretend water flows uphill if it never does? It's a philosophical issue.
Look. You can define systems that are contradictory and reason about them, same as you can define big sets and then assume they dont exist at all. Its just games with symbols in the end. Dont try to look for truth in these big sets because truth has a way of being a slippery concept here.

$this->bbcode_second_pass_quote('', 'S')o for these and other reasons, I look with fascination on the undiscovered implications of elementary number theory. For now it is a hobby, but I may apply to a Phd program in mathematics to study elementary number theory and work on a few speific problems.
Number theory isn't the bottom. The real problem is there is no base that really satisfies most, but I would recommend constructive set theory for a base, then arbitrarily add things like infinity and choice if you really want to play around with nonsense in Cantor's paradise, and then then the Continuum hypothesis and its negation for other big sets that really have nothing to do with the world we live in.

$this->bbcode_second_pass_quote('', 'I') am always torn though because I see so much pain in the world and I just don't want to think that all I contributed was a partial proof of the Goldbach Conjecture or some similarly useless result.

Then be an engineer, and stop worrying about the unknowable. It certainly pays better
Last edited by Dezakin on Wed 27 Sep 2006, 16:36:33, edited 1 time in total.
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Re: September OPEC Production Falls - Petrologistics

Unread postby Doly » Wed 27 Sep 2006, 04:55:09

Whoa! I never expected to see a discussion about advanced math here! Can I chime in? Number theory has always been a favorite with me.

$this->bbcode_second_pass_quote('Dezakin', '
')$this->bbcode_second_pass_quote('', 'T')here is a mystery there. I think some philosphers of the past have suggested that our ability to apprehend real numbers but never actually master them suggests there is a spiritual component to the universe. We say they exist because our reason implies them, but we can never mechanically verify their existence in the natural world.

We don't have to assume they exist at all.


Well, Dezakin, no, unless you want numerical analysis to work. And numerical analysis is the basis of physics since Newton. If you don't assume that every converging limit converges to a number, where does that leave you?

$this->bbcode_second_pass_quote('', 'f')or that we would need a dense subset of irrational numbers that is closed under arithmetic, but look Pi/2 *2/Pi = 1. So automatically assuming the existence of an irrational field is easily shot down. But I do suspect that if you were to use an irrational base for numbers you might be able to construct such a field.


Well, no, if you are using normal arithmetic, that is. x/x=1, any way you look at it. As soon as you use normal arithmetic, you have to include all the rationals in your set. Then you can include whatever subsets of irrationals you want on top of that.

$this->bbcode_second_pass_quote('', 'H')ow can we concieve of something that is not somehow a possibility within the physical universe? Why are we able to pretend water flows uphill if it never does? It's a philosophical issue.


It is a very practical ability to be able to imagine something that we have never seen, because it means that we don't have any problems absorbing information that other people give us. This also means that we don't have any problem imagining things that don't exist, even things that couldn't possibly exist.
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