{link » Understanding Synthetics}
The best strategy for computing efficiency involves increasing speed (of execution) and storage capacity, and miniaturization plays an important role for both types of increases. In a sense, miniaturization plays a role in software speed-of-execution as well as in hardware/firmware speed. Software "miniaturization" is accomplished by devising algorithms that eliminate as many intermediate computing (and storage/retrieval) steps as possible without sacrificing accuracy. Therein lies the problem for efficacy. Software miniaturization tends to produce opaque coding.
Any large-scale software development effort is a multi-man-year project. It is a "living", in the sense of an evolving, entity. And for humans, an evolving entity needs to be transparent enough to be relatively comprehensible for succeeding groups of developers. Thus, efficiency must ultimately be tempered by adequate transparency in order to be effective.
What does the foregoing have to do with the subject of this post? It seems to me that the financial wizards who developed the opaque investment vehicles got carried away with the "efficiency" of their design until its opacity became so dense that practically everyone lost sight of its market value. But the market's vision is, ultimately, perfect.
(Thanx: Craig Newmark)
“So you buy a synthetic IBM five-year bond instead, taking advantage of the much more liquid CDS market. Essentially, you take the $100 million that you were going to spend on IBM bonds, and you put it into a special-purpose entity called, say, "Fred". (In reality, it'll be called something really boring like Synthetic Technology Investments Cayman III Limited, but Fred is easier to remember.) First, Fred takes the $100 million and invests it in 5-year Treasury bonds.”I got involved in computer programming in the early 1960's when the computing power of today's net book filled a very large room with big iron and miles of cable. Moreover, a software package designed to perform non-trivial computation comprised thousands of punched cards. The universal objective was then, and continues to be now, efficiency. But efficiency is only one edge of a metaphoric sword called "efficacy". The other edge is transparency.
— Felix Salmon
The best strategy for computing efficiency involves increasing speed (of execution) and storage capacity, and miniaturization plays an important role for both types of increases. In a sense, miniaturization plays a role in software speed-of-execution as well as in hardware/firmware speed. Software "miniaturization" is accomplished by devising algorithms that eliminate as many intermediate computing (and storage/retrieval) steps as possible without sacrificing accuracy. Therein lies the problem for efficacy. Software miniaturization tends to produce opaque coding.
Any large-scale software development effort is a multi-man-year project. It is a "living", in the sense of an evolving, entity. And for humans, an evolving entity needs to be transparent enough to be relatively comprehensible for succeeding groups of developers. Thus, efficiency must ultimately be tempered by adequate transparency in order to be effective.
What does the foregoing have to do with the subject of this post? It seems to me that the financial wizards who developed the opaque investment vehicles got carried away with the "efficiency" of their design until its opacity became so dense that practically everyone lost sight of its market value. But the market's vision is, ultimately, perfect.
(Thanx: Craig Newmark)
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