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Attack of the Killer Algorithms – “Algo Duping 101″

 

Here’s a selection of videos that offer a lot of information, which I call “Algo Duping”. I have written several posts on the Medical Quack about this topic and here’s a group of MUST SEE videos if you want to understand what is happening in the world. The general public does not like math, is afraid of it, etc. but banks and corporations are not and they use it against us. First off let’s hear from Charlie Siefe, Who Wrote the Book, “Proofiness, The Dark Arts of Mathematical Deception. Yes it is alive and well so hear what he has to say as it’s true. After this video there’s a couple links to PLOS One studies, the first one says “the fear of math causes physical pain” with humans, and it’s an all out study with MRI images and all. Why do you think Wall Street and big corporations win all the time, they don’t have this fear or got over it, they do math and right in the beginning of the video, Charlie says just that, people hate math and thus they are open to be Algo Duped as they don’t know the difference and a lot of it is hard to tell. Hmmm, formula has a square root in it, been all over the news, well it must be right, wrong. The second one is a little more tech minded and talks about methodologies to fiddle with a P Value and Charlie explains what that is in the video for finding value. Check the links at the bottom of this video.

“Algo Duping” – PLOS One Journal Publication Explains Why The Fear of Math Plays a Big Role As One Underlying Reason We All Get Duped And Those Who Don’t Fear Math Take All the Money, Gradually, Using “Mathematical Formulas & Algorithms” PLOS One Abstract–Methodology for Detecting Manipulation of “P Values” To Show Significant Statistical Value, “Inappropriate Fiddling” Which Can Lead to “Algo Duping” Situations And Numbers

The next video will focus on how Algorithms Shape our Lives, from Kevin Slavin and again he’s right on the money here and he tells you to look for things in every day life, same thing I say about the “Attack of the Killer Algorithms” series I wrote…and you will find some of these same video over there as well. He does a very good job explaining how machines talk to machines and algorithms talk to algorithms. No human makes the calls, all done by the algos.

Now let’s really dig in and hear from some Quants, who tell exactly what they do when designing business models. This is a documentary called “Quants, the Alchemists of Wall Street” and they make the math and formulas that move money. Banks and companies use these all the time and the one interview tells you that yes they are smart and talks about their attitudes as they literally have the CEOs by the balls, as they don’t understand their own business models that they pay royally for the Quants to write. In this video you see the software designer who created the software for the big mortgage scam. It’s not his fault but rather how it was used and abused. He makes one very good quote at the end, “You Can Do Anything With Software” and also points out the software models and the real world do clash. Secondly you see folks like Emanuel Derman who got started being a quant before there was name for it and had no idea how it would evolve and watch Paul Wilmott who also started early teach Quant School.

Sean Gourley who is a physicist himself and he discusses the same issue and I put this one last as it is a little more technical but still worth watching as you will get something

60 Minutes did a great investigative report that gives you many more additional examples on how you are being sold, your information that is and it’s flawed a lot of the time. Listen to the stories and how when it comes to fixing corporate USA errors, we are always on our own ticket to do so, is that fair? Look at the money it takes and its all about the flawed data created by the algorithms and then the end results and analytics created are faulty as well, it is a circle thatdoesn’t stop.

This is Cathy O’Neil who worked for DE Shaw, a hedge fund and she tells her history. She worked as a quant and taught math and she has a lot to say. Actually I’m glad she’s speaking out as she’s better than me as she has first hand experience in what it’s like to work in the financial district. She was hired to do futures with risk assessment and then nobody was using it and taking more than the suggested risk. Today she’s also part of the Occupy Movement (yes it is not dead) with their alternative banking solutions and working with credit unions. It’s a very good interview done with PBS. She’ll tell you flat out how they look at the rest of the world. She does a series of lectures called “Weapons of Math Destruction”. The full 4 part PBS series on Wall Street can be seen here,  or keep scrolling as the entire series is here at the bottom.so get comfortable as it is long watch for all 4 parts but done very well.

PBS also did a great story called “The Untouchables”…and again we come back to the digital illiteracy of the government.  I don’t know about you, but other technologists along with myself could pick it right off that he had no clue on how to go about investigating the banks…did not even understand how “math modeling” works and this is what enabled the banks to do their “sub prime crime”…models can lie and hide risk and you can watch his body language as well as listening to him.  When I watched it for the first time, it took me less than 5 minutes to make that connection, he has no clue.  This has been further evidenced with the “Goldman Stolen Code” and a couple other stories…they have no clue on what code has value and what does not.

If they would have had had some decent computer scientists on the case I could almost guarantee you they would find the fraud one way or another be it the sale of the securities, flawed data on the transmission or sale or a number of other areas.  Now when you find that kind of evidence, you are getting closer to black and white here.  Sadly this just goes to show that relying on a couple wiretaps and little of much else just won’t make a case for you.

Another “Stolen Code” Case on Wall Street Emerges–Hope They Get It Right This Time And Either Prosecute the Case Correctly or Dismiss It-The “Evil” Drop Box Share…

The State of New York still brought another case against Sergey Aleynikov after a judge threw out the first case.  A jury of common consumers cannot understand all of this, I don’t care what anyone says. It is funny when you read the article about the FBI agent not knowing what “subversion” (SVC) was.  Anyone in programming will laugh their fannies off at reading about it as it’s a technology used by developers to share and check code in and out…been around for years and how operating systems get built, like Microsoft and Apple use “subversion”…see what I mean about digital literacy and the important role it should play with investigating “high tech” crimes…Goldman maybe should be looking to hire old Sergey back…he’s a software engineer that did quite a bit to help the Goldman data performance metrics…

Watch The Untouchables on PBS. See more from FRONTLINE.

 

Christopher Steiner is the author of “Automate This” has this great video that talks about how algorithms are taking over the world. He begins focusing on the market and continues on to tell you how they are taking over everything. When you are asked if the call can be recorded when talking to a customer service department, no it is not just being recorded as thousands of algorithms are listening to analyze just about everything you say and a profile is built on you with data. Listen to what he has to say here and realize that activities as such lead to a lot of data to sell. As he says who’s going to be the power that runs the algorithms that take and give as Wall Street has a hard time between drawing the line between utility and menace when it comes to formulas and math, in other words they have abused over and over a society that can be controlled with math and the execution of algorithms. Software is nothing but a group of algorithms working together in the words of Bill Gates.

Here are some additional links listed below from the Medical Quack regarding “Algo Duping” and for the Attack of the Killer Algorithms to be effective, we all have to be Algo Duped, so are you or are you not…something to think about…


”Hey dude let’s crunch some numbers and see if we can come up with some analytics to sell and get rich” There’s a few more on the Medical Quack and you can keyword “Algo Duped” to find them. Again be aware of what is going on around and you and more importantly what is going on that you can’t see but please acknowledge it is there as expert smarter than me are spreading the word for those who want to get educated and come out of denial. Data selling with banks and companies has become an epidemic in the US and they are getting rich selling data and data profiles on all of us. It’s an idea of mine to license and tax the data sellers to move some money back over to the 99% side. When the data is flawed and you are deprived of a loan, credit, etc. who’s dime are you on, yours. Many of the consumer apps and devices today also sell your data and the privacy policies are about as clear as mud. Time to license and tax the data sellers just as we license stock brokers, doctors, real estate sale people and so on. The only difference here is this is an intangible you can’t see and it’s basically the wild west with nobody minding the show. A license would open up a line of regulation as well as requiring a federal site to where all disclose what kind of data they sell and to who.

Time Has Come to License and Tax the Data Sellers of the Web, Companies, Banks, Social Networks..Any One Making a Profit-Consumers Deserve to Know What Is Being Sold and To Who in a Searchable Format

In summary the real problem here that contributes to keep some of this going is the billions made selling data. This is part of why we don’t have more jobs as companies, banks, social networks etc. don’t choose to expand but rather sell data as nobody watches, few are aware of the mechanics and so it goes on servers 24/7 and it moves money to the wealthy and keeps inequality going, sadly. Read the posts to find out a little more…how some analytics are for profit only and data is being matched and analyzed that doesn’t belong and consumers get hurt over and over.

Scientific Research–Fraud and Misconduct Rise As Competition for Funding Increases–Non Appropriate Use of Formulas and Algorithms Make It Possible To Deceive – Enhanced Scientific “Algo Duping” Big Data/Analytics If Used Out of Context and Without True Values Stand To Be A Huge Discriminatory Practice Against Consumers–More Honest Data Scientists Needed to Formulate Accuracy/Value To Keep Algo Duping For Profit Out of the Game

As Charlie Siefe says in the first video, all of this is for media attention so be aware of what is out there and see if you can tell the difference and I’m not attacking journalists per se as they have jobs and their ratings and employment security depends on how many readers they can attract too so not their fault but the way their job models are created. It’s all about context and much of the flawed data out there today is used out of context.

Last but not least let’s look at one of the biggest Algo Dupes in history and that has to be no other than Allan Greenspan. PBS did a very good documentary on this and shows who his partners were and the former banker of course has to be a Duper one would think as being from Goldman he knew what mathematics and models were created on the other side. You know what, same problem today and you rid the way for a while but eventually bad math and models will shake themselves out and it’s not pretty.

Greenspan was just an economist and could easily be duped by those who worked with models and he listened to them and convinced everyone else they were right but as we saw, it will all fall down one day, laws of math if you cheat. So again, Greenspan is the ultimate Dupe out there that with his digital illiteracy almost took down and entire country’s economy and look how long he hung on too..shameful and why we don’t need a repeat of this running the Fed. Better get someone with a “little” math in their background or watch out..history will repeat itself if we are bliss and sadly that’s about what’s out there today too. See how it worked duping Clinton as well as during good times the bad math can hide but when money runs short, you can’t hide it.

The Warning…

Here’s an essay worth reading for sure. I featured it on the Medical Quack and it has been published at O’Reilly as a free eBook.  All you need to do is register to download the pdf…this is once again Cathy O”Neill who worked on Wall Street and saw how models worked, how some lie, how some are inaccurate and so on…

“On Being a Data Skeptic- Modelers Have A Bigger Responsibility Now Than Ever Before”–A Must Read Essay, Start “Sniffing the Data”…

Also models and math come into play with Tax Havens…it’s all modeled by big corporations that don’t pay a lot of tax due to such havens.  You can hear in this video about the Big 4 Accounting firms that set them up…this is done by the same production company that did the Quants of Wall Street above..keep in mind this is all modeled…math…

“The Tax Free Tour” Documentary on How the Tax Havens Work, Who Runs and Owns Them, How Accountants Are Taking Over the Regulators And Not Held Accountable…

“Inside Job”….

Also, if you have never seen “Inside Job” watch it.  There’s a lot more history here on what lead up to the crash of the financial markets.  Charles Ferguson did a great job and Matt Damon is the Narrator.  Again it all comes back around to math models used for profit and nobody is asking for any transparency here with models that lie and/or hide risk and the subsequent algorithms that execute.

President Obama Defines Inequality As A Real Problem in the US That Needs to Be Addressed–Most of It Is Modeled By Banks and Companies With Power and Code to Move and Gain Money and Restrict Access–The System “Is” Rigged…

Here’s another video that was recently released and it has to do with code, high frequency code…the subject in the documentary is a former Goldman Sachs trader who opened his own high frequency firm and just could not figure out what he was doing wrong.  We are talking about a very intelligent person here who could not figure out why his algorithms were not working on the exchanges…he states he finally had some conversations and basically was told by insiders that no matter what you do and create with your code, there’s code on the exchanges with some smarter algorithms affecting access.  This documentary was done by the same folks that did the Quants of Wall Street above.  If you know a little bit about computer coding and algorithms, you’ll get this one for sure.  If not I think even though it is a pretty high level discussion, there’s plenty for the layman to watch as well…interesting look at a current day “geek” hedge fund too..it’s all in the code and games are fixed.  “I don’t think anyone really knows what’s going on”….

The Wall Street Code…

The Stock Market is Rigged…60 Minutes

This is another great video that talks to the author of a new book coming out that talks about the speed of the High Frequency Traders.  If only we could have some of the money spent here in healthcare, but keep in mind when they talk about why the process is complex, that goes over in Healthcare any more as well. This computer-based high-speed trading uses complex algorithms to move in and out of positions in fractions of a second. These HFTs give the big guys an edge. 

When you have time here’s PBS documentary in four videos that take you back in time up to almost present day, October of 2012 of how Wall Street evolved.  It’s interesting to see how derivatives were born, at hotel J P Morgan meeting with a bunch of young executives and their formulas.  It was the birth of a whole new way to gamble on Wall Street.  Come back when you have time and watch off them though,  a good learning experience.  You will see Cathy O’Neil here who is in one of the above videos with her full interview here as well.

Money, Power and Wall Street….

Part One

As Wall Street innovated, its revenues skyrocketed, and financial institutions of all stripes tied their fortunes to one another. FRONTLINE probes deeply into the story of the big banks — how they developed, how they profited, and how the model that produced unfathomable wealth planted the seeds of financial destruction.

Part Two

Beginning with the government bailout of the collapsing investment bank Bear Stearns in the spring of 2008, FRONTLINE examines how the country’s leaders — Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and New York Federal Reserve President Timothy Geithner — struggled to respond to a financial crisis that caught them by surprise.

Part Three

FRONTLINE goes inside the Obama White House, telling the story of how a newly elected president with a mandate for change inherited a financial crisis that would challenge his administration and define his first term. From almost the very beginning, there was a division inside the economic team over how tough the White House should be on the banks that were at the heart of the crisis.

Part Four

FRONTLINE probes a Wall Street culture that remains focused on risky trades. Bankers left an ugly trail of deals extending from small U.S. cities to big European capitals. For more than three years, regulators have tried to fix an industry steeped in conflicts of interest, excessive risk taking, and incentives to cheat. New regulations are being written, but can they fend off the next crisis?

Keep checking back here and there as I find new videos that are on topic, I’ll keep adding them.  November 4th a new documentary comes out and it will be here, “The Wall Street Code”….

The Medical Quack Tip Jar…


Any contributions are always appreciated! If you found something here worth some value feel free to jump in as the Medical Quack sincerely appreciates it.   I’m trying to group together enough videos that will help the layman understand the math and how it has been many years of Algo Duping to get us to where we are today and the more you understand, the more we can fight back against bad math and code that has been duping you and our government forever.  Perhaps some day we will have some action that will allow some reverse engineering of some of the “magic math potions” that have allowed the re-distribution of money in the US and the world.

Listen to the Quants who speak out…the early ones who were there when this all began as they too had no clue as to how it would evolve as they thought they were there to increase efficiencies but as the power of math models evolved they soon found out that manipulation became the name of the game.

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