Sridhar Vembu’s Blog

… it has been good knowing you, sweetheart, but the time has come for us to move on. It’s not really about you, it’s about me. I don’t think I am a good enough man for you. We have shared a lot of times together, good and bad. You got cranky at times, but I loved you all the same. You have been good to me. We have shared all our secrets together. I knew the very words to turn you on, and you held my life in your embrace.

But now, I am not so sure we should be so tied to each other. I am afraid I have grown out of you. It started only as a casual fling, but that made me realize what I was missing. I need my freedom, I need my space, outside of your warm embrace. May be both of us, set free from each other, will discover our true selves.

When we first met, you were, well, a little overweight. As you slimmed down, you became a sleek beauty, and we became an inseparable couple. But times have changed. I am sure you will find a good future without me.

I will be fair to you. I propose you keep the house and accessories. I will just take my memories with me. If I have said anything that is of a personal nature, I am sorry, please purge yourself of that memory. It won’t do you any good to hold on to that. Make a fresh start, so you can find space in future; you surely will find love just as I hope to find variety in my pursuit.

So my dear “personal” computer, let’s get a divorce. My casual fling started when I moved my email to Zoho Virtual Office. Then my documents moved to Zoho Writer. Very soon, I find myself going places without you, and finding that I don’t miss you at all. Once I experienced that freedom without you, it is hard to be tied down. Rather than pretend that this is still working, I propose we part on amicable terms. I am sure you will find many new admirers. I hope we can still meet once in a while and be friends.

Joel on Software writes in The Perils of JavaSchools

There is a basic assumption Joel makes here: a Computer Science degree is necessary or sufficient to be a real world programmer [I will leave aside his point about training to be a CS grad student]. My personal experience in the industry, working with numerous really good programmers, tells me otherwise. I will put general analytical and quantitative skills ahead of recursion, lambda calculus or pointers [ok, pointers may be a stretch]. In fact, as technologies like operating systems and programming languages commoditize rapidly [how many OS designers does the world need? And even Paul Graham says that programming languages are massively over-supplied, to the point that even when they are given away, most of them won’t ever achieve critical mass!], the challenges of real-world software is how to assemble cool products out of commodity ingredients. Take Joel’s company’s latest launch, CoPilot: I bet it primarily required clever integration and packaging of pre-existing ingredients and nice user experience design, and not much of recursion/lambda/pointers.

My only “Computer Science exposure” if it can even be called that was Introduction to Computing course in my first year of college [1985], and the language taught was Fortran [no recursion, no lambda, no pointers!]. I never wrote another program for nearly 10 years after that, when I entered my job, which required programming. I learnt C++ [some pointers, but still no recursion or lambda]. Later on, I found myself in a project that needed C, so I had to be good with pointers. Then I learnt Java, a smattering of Lisp mainly to understand what functional style is all about, and lately paying attention to Ruby.

A lot of programmers I know would fit the description of never-studied-Computer-Science-but-picked-up-skills-on-the-job. They do just fine [take a look at our products!]. My strong belief is that if you have strong analytical/quantitative skills, and have a bent for programming, and a strong desire to learn whatever is needed, that is sufficient to be a real world programmer. Formal Computer Science education is helpful, but not absolutely necessary. Neither is a Computer Science education sufficient, especially if a practically-minded programmer is fed reams of boring theory that he/she could not appreciate at that time, and so just went through the motions to graduate. For example, I would have found the theory of programming languages absolutely boring in college, though I appreciate it better with experience.

Joel makes the comment

Surely among those weeded out because they just couldn’t stand Lambda [I am fairly mathematically oriented, and I can barely tolerate Lambda Calculus] may have been some great would-be programmers. What about people who code numerical algorithms for NASA? Do they need lambda calculus? I would argue they need excellent knowledge of convergence properties of various numerical algorithms. In fact, I know people who code those in Fortran to this day. How about people writing statistical data mining code? Should such people be banished from programming because they don’t happen to do well in lambda calculus in college?

A broader point: there seems to be two kinds of applied mathematics. The mathematics of physical sciences and engineering, and the mathematics of Computer Science. I put more value in the former [my personal bias], stuff like Fourier transforms, numerical methods, statistics, and so on, and less value on the latter even for a programming job. Even the first kind is increasingly programming driven, and I would say that in today’s software world, those skills are quite valuable.

Before I begin a quick note on inflation: libertarian economists of the Austrian Scool use the word “inflation” in its classical sense, to mean the expansion of the money supply. They do not use it to mean the statistically massaged, hedonistically adjusted fiction called the Consumer Price Index, which, for starters, doesn’t include asset prices, a key manifestation of inflation.

One of the subtler manifestations of inflation is the expansion of the regulatory State. We can see this most obviously in the cry for government intervention whenever oil prices climb; of course, it is not like the government even needs any reason to interfere - it just comes naturally.

Here is a news item that caught my attention - “appraisal fraud” in housing. Appraisers, whose job is to determine what a house is worth, so that the lender can make an appropriate loan, are complaining that mortgage brokers [who are technically working on behalf of the lenders] pressure them to inflate the appraised values, so that the borrower can qualify for the loan. Just think about that for a second.

Think about that for a second. Would a venture capitalist pressure anyone to increase the appraised valuation of a company so he can give them more capital? Then why are the mortgage brokers, who are techincally representing lenders, doing this? Common sense dictates that the lender stands to lose in such a transaction, in the event that the borrower cannot repay the loan and the lender has to seize the house. So why is it in the lender’s interest to give more money to the borrower, more money than what the house is really worth?

Quick answer: easy credit, courtesy Greenspan/Bernanke Fed. To trace this connection back to that source, realize that there are no “lenders” in the traditional sense anymore in the mortgage business; absolutely no one is lending their own money. If they were, they obviously would exercise more care. Everyone in that industry is a “transaction processor”, who gets a fee based on “originating a loan transaction”. So it is in the interest of the “lender” as well as the mortgage broker that a loan gets made.

The “lender” then turns around and packages the mortages and sells it as a mortgage-backed bond. Hedge funds, insurance companies, foreign central banks and other entities buy those bonds. The ultimate buyers have no idea of the kind of tricks that went into making the loan transaction happen. They naively assume that historic foreclosure rates will continue to apply, even though historically, lenders used to exercise a lot of caution in making loans, when their own money was at stake. In other words, the statistical models that are used to evaluate the quality of these mortgage-backed bonds assume a structure of the industry that no longer exists. Such moral hazards are not easily captured in the mathematical models.

So the “solution” that is being proposed? More government, more laws. Regulate the mortgage brokers.

Has anyone wondered why appraisal fraud is a problem now, when the mortgage brokerage industry has been around for decades? What has changed in the last couple of years? [Answer: Easy money again] And both the medical association and the legal assocation are well known for keeping prices very affordable for the public [yeah, right], so let’s apply the same solution to mortgage brokers.

This is the kind of real world problem I am sure Professor Ben Bernanke never thinks of when he dreams up his monetary theories and proposed his helicopter money solution to beat a deflationary downturn. The expansion of the regulatory state is a direct outcome of the inflation unleashed by the Fed.

When this housing bubble [direct result of the credit bubble unleashed by the Fed] is over, we will see a lot more legislation and regulation, in return for taxpayer bail-outs.

Sofware engineers tend to be drawn to liberatarian economics and I don’t believe that is a very original observation either. We know how complex software can get, so we understand how infinitely more complex an economy is. It is the ultimate conceit to think that anyone can “run” an economy, as central bankers attempt to do. Central banking and the manipulations of money have a subtle yet profound impact on individual liberty. The 20th century was the century of all manner of isms, and all of them shared the common disdain for sound money and the Gold Standard. Alan Greenspan said as much in his famous 1967 article Gold and Economic Freedom

Yet, in what must be one of the ultimate ironies of our times, Alan Greenspan-the-libertarian-Ayn-Rand-acolyte presided over one of the most inflationist monetary policies ever. The world-wide housing bubble is his last and most dangerous legacy.

Ben Bernanke, the other Princeton professor that I am not so thrilled with, is going to take the fall for Greenspan’s mistakes. I don’t feel sorry for him, because Bernanke’s ideas in monetary policy are nonsensical, so he will richly deserve the failure that awaits him. I just feel bad for the fate of the rest of us, subjected to his monetary policy experiments.

Tim Iacono, a software engineer, writes a carefully researched, beautifully written blog http://themessthatgreenspanmade.blogspot.com - I am a big fan! In particular read his analysis of how the government understates inflation in housing and healthcare.

Net result: if inflation is properly accounted for, GDP is not growing at all. Not terribly surprising to those of us living in the real world, watching costs for essentials increase inexorably, but what does Bernanke care? His equations tell him all is OK with the economy … and there is no problem he can’t fix with a few more injections of the steroid [aka fiat money], which he has promised to drop from helicopters if necessary. Watch that gold price, because in times of distress the world turns to real money.

Coming from India, where gold is deeply embedded in the culture as a store of wealth, perhaps an evolutionary response to the millennia of invasions and depradations, I have an even better appreciation for gold. India, in spite of its extreme poverty, has enjoyed impressive peace and stability, precisely because of the role of gold. Even in the times of the worst plunder by the rulers, the common citizens had a way to protect the fruits of some of their labor. The world will see the value of gold yet again, but I just hope we don’t have to go through too bad an economic crisis to get there.