Digital Musings

De la créolisation en lieu et place de la disruption

D'or et d'airain

Disruption? Créolisation?

Europe, où vas-tu? Relire Jules Romains

Relire Jules Romains (cité par Jean Guéhenno in Dernières lumières, derniers plaisirs, p 128, Grasset, 1977):

Europe! Je n'accepte pas
Que tu meures dans ce délire.
Europe! je crie que tu es
Dans l'oreille de tes tueurs.

Europe! Ils nous ferment la bouche.
Mais la voix monte à travers tout
Comme une plante brise-pierre.

Ils auront beau mener leur bruit,
Je leur rappelle doucement
Mille choses délicieuses.

Ils auront beau pousser leur crime,
Je reste garant et gardien
De deux ou trois choses divines.

Smartlibris: la bibliothèque numérique des familles

SMARTLIBRIS est en ligne depuis hier!

Les passionnés de cinéma assouvissent leur passion pour le 7ième art avec NETFLIX® (www.netflix.com). Les amateurs de chansons vivent en musique avec DEEZER® (www.deezer.com) et SPOTIFY® (www.spotify.com).

QUID DES AMATEURS DE LIVRES ET DE LECTURE ?

Désormais, grâce à Cyberlibris® (www.cyberlibris.com), les férus de livres et de lecture disposent de SMARTLIBRIS® (www.smartlibris.com)

Avec SMARTLIBRIS, les livres numériques sont enfin accessibles au grand public en ligne (streaming), en texte intégral et sur abonnement forfaitaire :

-    SMARTLIBRIS a été conçu pour une utilisation en famille. Le service donne accès à une bibliothèque numérique trilingue (français, anglais, espagnol) riche d’environ 9000 livres qui couvrent un large champ thématique, de la fiction à la non-fiction. Cette bibliothèque s’enrichira des apports réguliers des maisons d’édition partenaires de Cyberlibris.

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Avec SMARTLIBRIS, Cyberlibris nourrit une ambition simple:

« Fournir à chaque foyer à un coût raisonnable et dans le strict respect de la propriété intellectuelle un accès démocratique à l’outil de Savoir, d’Evasion, de Réussite et de Découverte qu’est une bibliothèque numérique. »

Une fois l’abonnement familial acquitté, chaque membre de la famille accède à la bibliothèque, à ses livres et ses outils :

-    À la maison : Raconter une histoire aux enfants au bord du lit, guider les adolescents dans leurs études, choisir la prochaine destination de vacances de la famille, comprendre les avantages de l’énergie photovoltaïque, connaître le droit de la copropriété, cuisiner thaï pour ses amis, lire un roman, un polar ou une nouvelle... les livres attendent d’être (déc)ouverts et lus en ligne.

-     En mobilité : Vérifier une définition juridique, lire un poème, envoyer la fiche d’un livre sur Twitter ou Facebook ... rien de plus facile. Et c’est aussi possible en WiFi, en 3G, à partir de son iPod ou de son iPhone.

Avec Smartlibris, Cyberlibris élargit les opportunités de visibilité et de revenus des catalogues des maisons d’édition:

-     Jusqu’à présent, les bibliothèques numériques conçues par Cyberlibris et accessibles par abonnement institutionnel étaient réservées aux écoles, aux universités, aux institutions et aux bibliothèques. Ces bibliothèques numériques, utilisées quotidiennement par des centaines de milliers de professeurs, étudiants, professionnels et bibliothécaires, sont depuis près de dix ans la source de substantiels revenus complémenaires (à ceux du livre papier) pour les maisons d’édition concernées et leurs auteurs.

-    Dorénavant, la famille, au gré de ses découvertes et de ses lectures, participe, elle aussi, sous la forme originale de l’abonnement, à la rémunération des auteurs et de leurs maisons d’édition.

Marchés de dupes d'Henri Bourguinat et Eric Briys: le livre en librairie le 9 septembre!

Le communiqué de presse des Editions Maxima : CP MARCHES DE DUPES

Le (Grand?) Soir :-)

L'e-book donne naissance à la bibliothèque numérique

un article du

Plus ça change, moins ça change!

ADDRESS ON THE BANKING SYSTEM

[Delivered at a joint session of the two Houses of Congress, June 23, 1913.]

Mr. Speaker, Mr. President, Gentlemen of the Congress:

It is under the compulsion of what seems to me a clear and imperative duty that I have a second time this session sought the privilege of addressing you in person. I know, of course, that the heated season of the year is upon us, that work in these chambers and in the committee rooms is likely to become a burden as the season lengthens, and that every consideration of personal convenience and personal comfort, perhaps, in the cases of some of us, considerations of personal health even, dictate an early conclusion of the deliberations of the session; but there are occasions of public duty when these things which touch us privately seem very small, when the work to be done is so pressing and so fraught with big consequence that we know that we are not at liberty to weigh against it any point of personal sacrifice. We are now in the presence of such an occasion. It is absolutely imperative that we should give the business men of this country a banking and currency system by means of which they can make use of the freedom of enterprise and of individual initiative which we are about to bestow upon them.

We are about to set them free; we must not leave them without the tools of action when they are free. We are about to set them free by removing the trammels of the protective tariff. Ever since the Civil War they have waited for this emancipation and for the free opportunities it will bring with it. It has been reserved for us to give it to them. Some fell in love, indeed, with the slothful security of their dependence upon the Government; some took advantage of the shelter of the nursery to set up a mimic mastery of their own within its walls. Now both the tonic and the discipline of liberty and maturity are to ensue. There will be some readjustments of purpose and point of view. There will follow a period of expansion and new enterprise, freshly conceived. It is for us to determine now whether it shall be rapid and facile and of easy accomplishment. This it cannot be unless the resourceful business men who are to deal with the new circumstances are to have at hand and ready for use the instrumentalities and conveniences of free enterprise which independent men need when acting on their own initiative.

It is not enough to strike the shackles from business. The duty of statesmanship is not negative merely. It is constructive also. We must show that we understand what business needs and that we know how to supply it. No man, however casual and superficial his observation of the conditions now prevailing in the country, can fail to see that one of the chief things business needs now, and will need increasingly as it gains in scope and vigor in the years immediately ahead of us, is the proper means by which readily to vitalize its credit, corporate and individual, and its originative brains. What will it profit us to be free if we are not to have the best and most accessible instrumentalities of commerce and enterprise? What will it profit us to be quit of one kind of monopoly if we are to remain in the grip of another and more effective kind? How are we to gain and keep the confidence of the business community unless we show that we know how both to aid and to protect it? What shall we say if we make fresh enterprise necessary and also make it very difficult by leaving all else except the tariff just as we found it? The tyrannies of business, big and little, lie within the field of credit. We know that. Shall we not act upon the knowledge? Do we not know how to act upon it? If a man cannot make his assets available at pleasure, his assets of capacity and character and resource, what satisfaction is it to him to see opportunity beckoning to him on every hand, when others have the keys of credit in their pockets and treat them as all but their own private possession? It is perfectly clear that it is our duty to supply the new banking and currency system the country needs, and it will need it immediately more than it has ever needed it before.

The only question is, When shall we supply it—now, or later, after the demands shall have become reproaches that we were so dull and so slow? Shall we hasten to change the tariff laws and then be laggards about making it possible and easy for the country to take advantage of the change? There can be only one answer to that question. We must act now, at whatever sacrifice to ourselves. It is a duty which the circumstances forbid us to postpone. I should be recreant to my deepest convictions of public obligation did I not press it upon you with solemn and urgent insistence.

The principles upon which we should act are also clear. The country has sought and seen its path in this matter within the last few years—sees it more clearly now than it ever saw it before—much more clearly than when the last legislative proposals on the subject were made. We must have a currency, not rigid as now, but readily, elastically responsive to sound credit, the expanding and contracting credits of everyday transactions, the normal ebb and flow of personal and corporate dealings. Our banking laws must mobilize reserves; must not permit the concentration anywhere in a few hands of the monetary resources of the country or their use for speculative purposes in such volume as to hinder or impede or stand in the way of other more legitimate, more fruitful uses. And the control of the system of banking and of issue which our new laws are to set up must be public, not private, must be vested in the Government itself, so that the banks may be the instruments, not the masters, of business and of individual enterprise and initiative.

The committees of the Congress to which legislation of this character is referred have devoted careful and dispassionate study to the means of accomplishing these objects. They have honored me by consulting me. They are ready to suggest action. I have come to you, as the head of the Government and the responsible leader of the party in power, to urge action now, while there is time to serve the country deliberately and as we should, in a clear air of common counsel. I appeal to you with a deep conviction of duty. I believe that you share this conviction. I therefore appeal to you with confidence. I am at your service without reserve to play my part in any way you may call upon me to play it in this great enterprise of exigent reform which it will dignify and distinguish us to perform and discredit us to neglect.


Source: Project Gutenberg's President Wilson's Addresses, by Woodrow Wilson

This eBook is for the use of anyone anywhere at no cost and with
almost no restrictions whatsoever.  You may copy it, give it away or
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Title: President Wilson's Addresses

Author: Woodrow Wilson

Editor: George McLean Harper

Release Date: December 31, 2005 [EBook #17427]

Language: English

Risk can be securitized, information may not and that means heading for trouble...

Securitization has become a panacea on financial markets.

Indeed, it is predicated on the simple idea that balance sheets are more often than not the best parking for risks. In other (shareholders) words, they are the most costly parking you can find. Hence, commercial banks with the structuring help of Wall Street firms have "shipped" assets and liabilities that were so far stored in their balance sheets to investors.

It sounds like a marvelous and lucrative never ending innovation spiral à la Merton where banks can do more business, investors have access to a wider spectrum of securities and risks are more efficiently shared.

Too good to be true: The subprime mess is a wake up call, one that calls for deep thinking.

There are some things that do not change. In October 1987, the equity market crashed and portfolio insurance was designated as the culprit. Portfolio insurance used to be considered as the solution to downside risk protection. Investors hate downside risk even more than they love upside. University of Berkeley mavericks, Hayne Leland and Mark Rubinstein (co-founders if LOR), came up with a technique that promised to replicate what a long put option does, namely pay off, when the market goes south. The "trick" was simply to use Black-Scholes-Merton option hedging argument to replicate the put option payoff. In other words, they were selling stock index futures (mechanically/dynamically) and going long T-bills (cash) when the equity market was tanking. When the market was rallying up, they did the opposite. That's why when the market crashed in October 87, LOR was accused of provoking/amplifying the downward trend. The argument is a bit odd: Mark Rubinstein rightly pointed out that nobody praised LOR when the market was going up for making the growth even stronger.

The truth is that while portfolio insurance is in effect more of car insurance than earthquake insurance type there is an important market item that it paradoxically "destroys": Information. Indeed, when lots of investors are willing to buy put options bidding the price up they signal their bearishness to the market. What portfolio insurance does is to break down a single (put) transaction into two separate transactions: stock index futures and T-bills. Information about market expectations may get distorted in the process as it is hard for the rest of the market to decipher the initial intent. Worse, as shown by Sanford Grossman and others when portfolio insurers sell mechanically to dynamically replicate the target put, people may mistakenly think that this signals bad news. Asymmetric information problems have increased and we know both from the seminal works of George Akerlof, Michael Spence and Joseph Stiglitz and casual business experience that this is a sure recipe for trouble.

Sadly enough, the same holds true with securitization as witnessed by the subprime mess. Bad loans have been securitized. As a result the shareholders of the originating banks do not bear the consequences, good or bad, of their loan activity anymore. They have no incentive anymore to monitor these loans that get "diluted" in securitization vehicles. Hence while risks seem to have been more efficiently cut into pieces and shared the overall situation has worsened drastically because asymmetric information problems are now more toxic (1). Asymmetric information is a market killer and we end up collectively harvesting what others have planted.

Not convinced. Well, think of what microfinance does. It does exactly the opposite: It reduces information asymmetries by putting monitoring and safety devices in the micro-lending process: Lend only to women, in a village where everybody knows each other, make the borrowers collectively liable when one of them defaults etc... This is why it is successful.

So, next time innovation in the form of sophisticated securitization knocks at your door, ask yourself whether information and incentives have been reduced or not before joining the bandwagon. If portfolio insurance and the subprime can teach us one thing or two, it is precisely this.



(1) Not to mention the fact that it becomes very hard, almost impossible, to restructure the (securitized) loans when disaster strikes.

What they knew about finance in Genoa in 1298

It is a striking fact that finance academics are not very interested in history and that history academics seem to have a fairly restrictive view of finance.

This is sad: The two fields have much to learn from each other. My co-author, Didier Joos de ter Beerst, and myself have been fascinated by a contract that was signed in 1298 in Genoa between Benedetto Zaccaria, a powerful merchant and admiral, and two Genoese financiers, Enrico Suppa and Baliano Grillo.

To the point that we have conducted an in-depth research about this contract (Didier was able to get a copy of the original version). This contract is a masterpiece of strategy and financial engineering and a great source of inspiration for economists, finance and history scholars.

After months of reading, struggling with the contract, going into intense discussions, we wrote a paper that has already been presented in several conferences. Lastly, Didier presented the paper at the XIVth International Economic History Congress in Helsinki.

If finance, options, derivative and structured products are your pet topics, if you have an interest in insurance and banking; if you are keen on history, especially medieval history, we think you will enjoy this paper.

The latest French version forthcoming in Revue du Financier is here: article_zaccaria.pdf

The current English version (IEHCPAPERBRIYSJOOS.pdf) is fairly long (worth it ;-) but still at the rough draft stage (with typos, sorry!)) We include a shorter (IEHC.ppt). A French version will be published soon.

We'd be delighted to receive your comments!