Nuclear deterrent and game theory exemplified

Speaking of North Korea's case and the bilateral nuclear threat some interesting questions emerge. For instance, I've asked myself questions like "would North Korea have the 'courage' to strike with nuclear arms" and "would US be forced to retaliate or what would happen afterwards"?

Game theory can give you precise answers to these questions posed here, but as well you can figure out the answers by yourself. I have to believe that North Korea would never take the risk of nuclear strike, unless it thought it has been struck first with nuclear arms. And why is that, then? That is because the US would be forced to strike back with no other alternatives and the Mad Emperor of North Korea wants to live, not commit suicide.

And why would the US be forced to strike back, you ask? Why couldn't they just leave it be and negotiate a peace with North Korea, because the damage is already done and striking back won't alter that? This is where the game theory comes into play. The US would be forced to retaliate because otherwise their nuclear weapons would no longer work as a deterrent. If they did not retaliate, other rogue countries with nuclear weapons might think they can strike with no fear of US retaliation. Even North Korea would probably think they can do it again with no consequences. That's why the US would have no other choice than to strike back. A deterrent is a deterrent only as long as the other parties BELIEVE that you will strike back regardless.

So, the BELIEF that you will strike back is essential here. In other words, the CREDIBILITY of the fear of retaliation is everything. This fear of retaliation also works in business life, in price wars for instance. Credibility is the key word, whether it is about the fear of retaliation or your good business reputation or something else. That's why organizations and people cling so desperately to their good reputation and try to keep it untarnished. It is not because they are such decent people or decent organizations as much as it is the fear that business or other possibilities in the future are in jeopardy if they lose their credibility. If someone cheats once and it becomes known, nobody wants to do business or anything important with them any more out of fear of getting cheated, too. Because this is about the future possibilities, sometimes businesses getting out of business altogether cheat in the end. That's because they have no fear of retaliation and losing a reputation doesn't mean anything to them any more.

That's also why people want to have a good reputation in business life as in real life, too. You might find it very difficult to land a good job, if it came known to the employer that you occasionally cheat. Even if you do it once, it is a strong deterrent enough against hiring you, because your credibility as a trustworthy person is compromised. However, if the employer doesn't know it and you look the part, you're fine. So, in the end it is once again about beliefs. BELIEFS and CREDIBILITIES.

Back to the nuclear issue. What about Iran's run for the nuclear arms? Iran must have certain motives to pursue the nuclear issue so adamantly, as Israel and the US must have certain motives to try to stop that from happening. I'll not discuss the Iranian motives as I am more interested in the other side, for now.

Israel and the US strongly state that a nuclear-armed Iran would pose a threat to the whole international community and Israel explicitly states that Iran might want to totally destroy Israel. Is that a credible statement? I don't think so, even if all the free thinkers in the US seem to also describe it as the real reason. I suspect they just don't want to voice the real reasons.

Let's examine this in some detail. Would Iran's nuclear arms pose any more threat than some of those little pre-Soviet countries with nuclear arms? I don't think so. Bear with me and try to follow my logic a bit. Let's try two different scenarios here. In the first, Iran would try to strike Israel with nuclear arms itself. Let's call this scenario A. In scenario B Iran would provide some terrorist organizations with nuclear arms.

In scenario A, Iran would strike Tel Aviv and/or Jerusalem with nuclear missiles. Or they could try to "wipe Israel off the map" with all their nuclear arsenal at once. What would happen? Even if Israel was totally destroyed, its submarines in the Mediterranean would launch a devastating counter-strike with nuclear weapons at Iran. Also the United States would nuke Iran, so Iran would stand to absorb terrible destruction from these two countries' armies. The first priority of Israel and the US would probably be to make sure that Iran never again fires another nuclear missile. Second priority, at least to the United States, would probably be to make sure that there would be as little damage to the oil fields as possible. Therefore the US would probably want to limit the nuclear strikes to some of the biggest cities in order to not to make the whole country uninhabitable so that no oil production could take place afterwards. Iran is one important producer of oil and that happens to be of great importance to the world economy. Anyway, all the bigger military installations inside Iran would probably be totally wiped out with conventional weapons by Israel and the US. They would not want to run the risk that Iran could strike again with nuclear weapons.

To complete the picture, it is good to notice that Israel and the US would also quite probably want to immediately take out the highest leadership in the country. Those who made the decision to use nuclear weapons in the first place. So the leadership of Iran would vanish amazingly fast either vaporized by nuclear arms or destroyed with conventional weapons.

Now, if you have followed my reasoning this far, I think you're ready to answer if Iran would ever dare to try the scenario A and strike Israel with nuclear weapons? My logic tells me that Iran would never dare, because it would amount to national suicide as well as personal suicide for the leadership. They would not dare.

What about the scenario B? No, they would not dare to sell nuclear arms to terrorist organizations for if those weapons were used and could be traced back to Iran, Iran would be held responsible. I happen to believe that the consequences of that would be quite identical to those in scenario A. So, I really don't believe Iran would try this alternative either because it is suicidal as well.

If you're still not convinced enough think about the economic repercussions on Iran's economy. What would happen economically if Iran ever struck first with nuclear arms? Even if we assume that the US and Israel would not retaliate for some reason and would even leave the Iranian leadership in tact, what would happen? Not many countries would want to trade with Iran any more and their economy would collapse. Even now they are importing about half the gasoline they need because they don't have the capacity to refine enough of their own oil. That import is plummeting right now because several international companies have recently stated that they have stopped deliveries to Iran due to the new economical sanctions approved by the United Nations. They are also having great troubles at this time with foreign investments and foreign capital and expertise they desperately crave, because international companies are less and less willing to invest in Iran because of the sanctions and the volatility of the situation. If Iran's exports and imports would plummet totally due to a nuclear strike, it's economy would collapse fast.

So, I think we have concluded clearly, that Iran would never strike first with nuclear arms for obvious reasons. Therefore I don't buy the official reasons that both Israel and the USA offer us. Israel and the United States probably have quite different motives for their efforts to keep Iran from acquiring nuclear weapons, but they obviously don't want to state their real reasons.

Comment if you agree or disagree, that would be interesting to read. I would also be intrigued to learn of your opinions on what are the real motives of Israel and the US? As well as what are the motives for Iran to try to acquire nuclear arms?

North Korea - the disobedient and misbehaving child of international community

North Korea and its notorious and cruel leader Kim Jong-il tends to pop up every once in a while, usually when NK is throwing a fit or having a tantrum as the Washington Post so eloquently put it. While I watch the show, I can't help but think about the psychology behind the North Korean behaviour. Or how the game theory, especially behavioural game theory, is a useful and applicable tool in appreciating what is happening in this international show. Or how this setting reminds me of a disobedient and misbehaving child trying to manipulate his or her parents.

This is how the son of a gun behind all this looks like. And of course his father was similar in all aspects and raised his son to have a serious character flaw of which we all now get to enjoy. Not.

As I don't have enough information on the objectives and interests of the important players I won't even try to do an analysis of the situation game-theory style. I'll just list some thoughts on the subject.

North Korea is a poor country and its economy is in shambles. It can only manage with food aid from foreign countries and even so its people go malnourished and starved - the ruling class excluded, naturally. At this time China is its main food supplier due to the fact that South Korea finally understood the foolishness of giving massive amounts of free food aid to North Korea to no avail. North Korea's conduct has usually been like the disobedient and ungrateful child - after it gets its way it reneges on its promises and is never grateful for received free help but demands more. It's like a child stamping his/her foot to the ground and making never-ending and unreasonable demands.

For a surprisingly long time it has gotten away with it, but it can't continue indefinitely. As long as the parents - the international community - is divided it easily gets its way. As a cunning child tries to drive a wedge between his/her parents and thrives when the parents don't have a unified front and a unified voice, the same way North Korea manipulates the international community wiggling and squirming any which way it can. China still seems to adamantly back the mad emperor, but it will be interesting to see if Obama can manage a successful approach. In many a fight Obama has proved in my eyes to be a master strategist with great knowledge of human psychology and I wouldn't be surprised if he could manage to pull it off. He may need another term for it even though North Korea might crumble in just a few years. I believe Obama is the greatest president the US and A has had for several decades and I hope he might get even this North Korean problem at least on the right track if not solve it.

These two photos show well who is doing the starving and suffering in North Korea. In the first picture you see a North Korean mother and the other picture portrays the fat cat himself...





Back to the psychology. It is intriguing how well and analogously these two entities of a disobedient and manipulative child and a misbehaving and manipulative country - or its regime - compare. Even though the country is a much much larger entity, it can be seen to act as an individual entity much like the child. The way this country acts and tries to milk every possible benefit is very much like the child. In this case the child has been given his/her weekly allowances despite not keeping his/her side of the bargains made. Perhaps now is the time the parents finally wake up and take notice.

In all this, most surprised I am of China's attitude. Even though China has been fairly recently humiliated as North Korea in the nuclear debacle took action contrary to China's public suggestions and later North Korea has been caught red-handed in the sinking of Cheonan, the South Korean warship, still China seems supportive of the mad emperor. The most obvious reason stated for China's attitude is the fear of massive stream of fugitives from North Korea to China if North Korea was to fall. However, I find this hard to believe. I believe it wouldn't be a total catastrophe for China if it was to take care of 10-20 million North Koreans. Maybe it's more probably the fear of a nuclear capable government succumbing to total chaos if the government and communist system was to totally unravel in North Korea? And maybe even the communist pride not wanting to see a communist fellow country falling apart? And maybe North Korea is a convenient little buffer between China and the US forces in South Korea? Who knows? Anyway, it will be interesting to watch what happens in the near future...

Read more of the situation here: www.northkoreanrefugees.com

The Old Hypocrite

I have been following closely the pedophile scandal evolving in the Catholic Church. I am happy that they are finally forced to admit their sick mistakes and even more glad I am about the example of Belgian earthly powers taking over an abuse investigation. Church clearly seems to have conflict of interest when investigating it's own priests' abuses of children. Those priests should be investigated and punished according to the earthly practises and laws. The so-called punishments the Church has meted out are ridiculous when compared to the gravity of the crimes. Or do you think it is enough of a punishment to move an abusing priest to office duty and not even take away his priesthood after he has molested dozens of children? No jail time?

I believe one problem in the Catholic Church contributing to these problems is celibacy. It is quite unnatural for a human being and may contribute to these sick occurrences. At the same time I am pondering about how widespread these problems really are? For instance, how widespread sexual abuse of children is in the churches that don't preach celibacy? Is there less sexual abuse? And what about the islamic world? Does it happen there as well?

During these latest waves of this scandal the Catholic Church has tried to whitewash the Old Hypocrite, the Pope, as an ardent and fierce advocate against child abuses and a strict punisher of abusers. I didn't much buy into that earlier and now, according to a New York Times article, some newly unearthed documents paint a completely different picture. Here are a few brief excerpts from that article:

"But church documents and interviews with canon lawyers and bishops cast that 2001 decision and the future pope’s track record in a new and less flattering light.

The Vatican took action only after bishops from English-speaking nations became so concerned about resistance from top church officials that the Vatican convened a secret meeting to hear their complaints — an extraordinary example of prelates from across the globe collectively pressing their superiors for reform, and one that had not previously been revealed.
...

The office led by Cardinal Ratzinger, the Congregation for the Doctrine of the Faith, had actually been given authority over sexual abuse cases nearly 80 years earlier, in 1922, documents show and canon lawyers confirm. But for the two decades he was in charge of that office, the future pope never asserted that authority, failing to act even as the cases undermined the church’s credibility in the United States, Australia, Ireland and elsewhere.
...

But the future pope, it is now clear, was also part of a culture of nonresponsibility, denial, legalistic foot-dragging and outright obstruction. More than any top Vatican official other than John Paul, it was Cardinal Ratzinger who might have taken decisive action in the 1990s to prevent the scandal from metastasizing in country after country, growing to such proportions that it now threatens to consume his own papacy. "

Perhaps it would now be time for the Old Hypocrite to step down? The Onion previously published a funny article on the subject heavily criticizing the actions of the Catholic Church and the Pope. You can read it here: Pope Vows To Get Church Pedophilia Down To Acceptable Levels

Raping languages

Me thinks it is time to write some lighter stuff for a change. Perhapsly I've got this all wrong? Perhaps all the writings in a blog don't have to be full of substance and facts and rationale?

This time I am gonna rant and rave about raping languages, my favourite hobby. Rape a language or play with words, whatever which way you wanna put it. I've found I am constantly doing it, so I must have some kinda weird urge to do so. I seem to rape all the languages at my disposal, pretty much every day of the week.

Anyways, this topic reminds me first and foremost of Borat and his fine documentary called "Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan". I found it hilarious. What first springs to mind are occurrences where a man mentions "mormons". Somehow - quite unintentionally, I think - Borat picks up the word as "moron" and talks of morons ever since. Another occurrence at a dinner table - a man tells Borat he is "retired" and Borat instantly recognises the word as "retarded". The whole table then rushes to help and tells Borat that the man is not retarded... And so forth...

Probably most of the "document's" scenes are real, but most likely the climax where Borat tries to kidnap Pamela Anderson is not a real world occurrence but staged. I first thought they might have been that crazy, but I've come to realize there would be legal implications. However, some of those poor people in the movie are fooled in so a humiliating and total fashion that they must have felt grossly insulted when they saw the film or learned of it. I absolutely couldn't have done what Borat did.

One of my own inventions in the field of language-rape is the word Repuglican. It is a combination of the words repugnant and Republican. From there you might quite unequivocally figure out my opinion of the Republicans in the US and A.

Right now, no other word plays come to mind. Feel free to add your own wordplay examples in the comments, if you remember any. Funny thing, I found the concept wordplay was even defined in Wikipedia...

The short of stock market corrections

Someone strayed to this blog by asking Google "how much the stock market would correct at present". That's a good question! Let's try to answer his/her question at least in part and discuss how big stock market corrections usually are.

Before we do that, let's try our hand in predicting (=guessing) market movements a bit. Some people are afraid of a double dip where the second dip recessionwise would be on its way in the near future. However, I don't believe there will be a second dip even though it is always possible. I believe the fundamentals are so strong that there will eventually be a good surge in stock markets. No later than this fall I'm expecting a good surge, hopefully at least 10 per cent in the stock markets at least in the emerging markets and Asia. I am also hoping there will be a smallish downward plunge during the summer due to low demand in the summertime and fears that the markets are not yet through the rough patch. Therefore I took all the money under my control out of the stock markets for the summer and I am planning to put it back in come fall. So I am hoping to avoid possible 5-10 per cent downward plunge during the summer and benefit from the hopefully at least 10 percent surge between August and January. Usually trade picks up after summer and the economic news are probably by then looking continually better and all this I believe is leading to a little surge! Time will tell if my guessology will hit the mark this time...

Back to the original question. In my observations the corrections in stock markets usually hit the area of 15-30 percent of the highest values. The economic crisis in 2008-2009 was far worse and is a very exceptional and rare occasion. Typically different markets around the world lost 60 per cent of their highest market capitalization and the Russian market really hit the floor. For example the RTS index in Moscow lost about 75 per cent of its value causing total panic also in Russian government. A good reminder for Moscow, I would say, that not everything can be dictated by order of Mr Putin...

The opposite side of the coin here is that if you bought funds investing in Russian stock markets when they had lost 75 per cent of the peak value you would stand to gain 300 percent in profits when they someday reach their previous peak. Even if they don't reach the previous peak the opposite movement is certain after so rapid a plunge and you will certainly make big profits. The problem is guessing when you're close to the bottom, but I did some buying close to the bottom and when a month ago I sold everything, the Russian investment had already doubled in value.

One interesting question is how often do these plunges or crises occur? Based on my observations that would be in the range of 6-10 years, but economists put the length of these business cycles at 5 to 7 year range. That means that peaks as well as crises in stock markets occur every 5-7 years, usually. That also means that now you could probably put quite safely money into some interesting market funds and let them grow in value there for the next 3 or 4 years before the next crisis or correction is at hand. That should be a safe bet. And in any case, usually you start hearing market rumours or negative expectations in the public at least half a year prior to anything happening. So, when you start hearing these rumours more and more, it's time to get out of the market.

About the real business cycles. If my memory serves me right, there was a depression/recession in 1991-1992. The next one I remember was when the dot com bubble burst in around 2000. And then the current crisis started in earnest in 2008. These numbers, if correct, would point to around 8 years between crises.

Now, hopefully these observations will help you to develop your own Guessology ideas of future market fluctuations. I would be interested in hearing YOUR thoughts on the subject!?!

Printing money - legally...

Have you ever noticed that public companies - that is, publicly traded companies in stock exchanges - in effect have the right to print their own money? Me neither, until one public company CEO pointed it out to me...

What this CEO meant was that a public company is free to issue new shares and sell them to the public or other entities. As these publicly traded shares are worth money and easy to liquidate in stock exhange, it is pretty much the equivalent of hard dry cash. Instead of issuing and offering these new shares to the public and investors, a public company also has another choice. These new shares can also be issued to a certain entity as a form of paying at least part of an acquisition price of another company, public or not. In other words, if you're a public company you can print your own money - that is to say, issue new publicly traded shares - and buy other companies with this "money". I had the perfect opportunity to watch from close range how this was done with masterful strokes by this previously mentioned CEO. I was privy to all the details and plans before they happened, and this CEO had predicted all the events with alarming precision. All the events took place pretty much exactly as predicted and in a little over year's time a smallish private company with a yearly turnover of 5-8 million euros morphed into a smallish international conglomerate with a yearly turnover of 80 million euros. In short, the company grew tenfold in a blink through acquisitions and mergers. That's like a fairy tale come true in business life!

To tell you an anecdote within an anecdote, I'll mention that I also learned a lot about negotiating from this CEO. He used some fairly inventive methods in negotiations and I wasn't always happy to end up with the shorter straw. I didn't make any too bad deals with him, but I felt I had given in a little too much. My own managing director at the time laughed at my complaints, but I was later vindicated. It so happened that our managing director was to renegotiate a little deal with this CEO. He did it over the phone and just a little later he came and told me that he was totally overwhelmed by this CEO. He had ended the call having renegotiated the little deal with new terms and felt happy about that. Very soon he realised that he had agreed to even worse terms than the original deal had, and he was forced to once again call him up on the issue. And our managing director was no new puppy to the game and still he had fallen. I felt some satisfaction listening to his story and how he now understood my complaints about this CEO's negotiating skills...

Back to the original story. I had made an acquaintance with this company and its CEO several years earlier when they hired me as a consultant to help them with their object oriented software development efforts. After that we ran into one another every once in a while and 5-6 years later I went to work for them full time. Their plans of going public and growing rapidly sounded very interesting to me and I saw the opportunity of doing something big and worthwhile. Therefore I joined their ranks at that point.



I was invited by their CEO to their Board of Directors' meeting where I heard their plans in detail. All the members of the Board were co-owners of the company and I was the only outsider in the meeting. The CEO detailed his plans and described every step of the way in vivid detail. I remember thinking that it's a wonderful and bold plan, and if even half of it were to come true it would be an unbelievable achievement. The basic idea was to first turn public and then use issued shares to buy other companies, first small and then bigger and bigger until the last one to be gobbled would be the biggest prize of them all. All of the acquired companies would be in the same business to enable greater synergies and financial efficiencies to be exploited. In these acquisitions almost no cash was to be used.

Most critical step in this CEO's plan was to go public because without that step completed succesfully there would be no currency to go on that wonderful shopping spree. The original plan was to go public in spring 2000, but the CEO had recently concluded it would be too late. He believed there would be too many IPOs for the last ones to succeed and therefore he wanted to expedite the initial public offering to take place half a year earlier, in fall 1999. He expected a great rush of IPOs of small companies and needless to say, he was right. Public interest might have greatly waned in the spring and the public offering might not have succeeded. I can only admire his foresight even though I know he had great contacts. Even if you have great contacts and are greatly positioned, it is not easy to interpret right the soft and weak signals you detect. You have to be visionary and in some small measure a true clairvoyant... :-)

He also envisioned the order in which the acquisitions would take place. First we would acquire several smallish Finnish companies in the business and after that we'd go on an international buying spree all over the world. And finally, we would gobble the big fish, much bigger than we were. All these acquisitions were friendly, not hostile takeovers, so I later realised that he had probably tested the waters previously and discussed his plans with the other parties to a certain degree. This makes it all the more extraordinary performance in my eyes, for he has been able to sell his vision to all these prominent and capable business people and make them come under the same umbrella, if you will. They all heard his call and came, and he himself landed on top of the new company as their CEO. I find it just amazing. Amazing.

As I mentioned earlier, the events took place quite exactly as he had envisioned they would. In a little over a year, a smallish private company with a yearly turnover of 5-8 million euros morphed into a smallish international conglomerate with a yearly turnover of 80 million euros and business literally all over the world. When the new company build-up was finished, I was assigned to the new position of Product Development Director of our Finnish subsidiary. I had in my unit half a dozen software development or software testing teams to run, each with a competent and experienced team leader, so I felt it was time to do great things. For me it was a dream assignment and it felt like tailor-made for me. Unfortunately, I wasn't to enjoy that for long, for soon I fell severely ill and was forced to give up that dream position. Even though that was a great disappointment I feel privileged to have been part of the process and having been able to watch the events unfold from a close range. Great experience!

That's it for today, folks!

Stifle financial "innovation"?

Now I really am disgusted. I once again read in the news the stupid banking-community-generated warning not to "stifle the financial innovation" with too much regulation. Innovation? Really? What productive innovation the banking sector really has to offer? More than what the bankers already shoved our way during the financial crisis of 2008?

This was Mr. Henry Paulson, the Treasury Secretary during the Bush administration, that this time used that stupid "financial innovation" theme in his testimony to the U.S. Congress. Well, that shouldn't surprise anybody, because this guy comes from the Wall Street. He used to be the CEO of Goldman Sachs until 2006 and he still seems to speak for the Goldman Sachs and the like.
(Check this USAToday's story: USAToday - Geithner and Paulson say more financial regulation is needed )

I don't think we need any more of that kind of financial "innovation". And I think it is VERY misleading to call those Wall-Street-inventions innovations, because it gives you the feeling that there would be something PRODUCTIVE about them. Now, if you're talking about software innovations, technical innovations or other physical product innovations, there you quite easily may have some real PRODUCTIVE innovations. However, there are no PRODUCTIVE innovations in these far fetched derivatives that only give you the possibility to bet on different things. What's worse, these derivatives based on subprime mortgages have given the possibility to endlessly bet on the same thing, which means effectively and endlessly multiplying the risk. It's a little bit different if farmers want to use some simple derivatives to insure their crops, but if you just want to bet on things and make money on that - or make money on other people betting on them - don't call them "financial INNOVATIONS". That's bogus. Like someone said well, if you really need to bet on things, that's what horse races are for.

Banking sector has some very important functions to help lubricate the machinery in the economy, but besides the basic functions I think it would be best to stifle their "innovations" a bit. Or a lot. I don't think we would be losing anything much if it was stifled a lot. There's not exactly much productivity we could lose and we could do much better with a bit smaller and less "innovative" banking sectors in the developed economies.

Off the top of my head, I would list these services the banking sector provides essential. Other than these, we could stifle the other services and "innovations" to death for all I care...

- basic banking functions (cash, withdrawal, savings, lending etc.)
- services for trading in stocks and other basic instruments
- investment bank services for mergers, acquisitions, public offerings and other BASIC operations
- raising of funds for nations, organizations and businesses
- simple basic derivatives for productive businesses to have some insurance-like-coverage against market fluctuations (NO Abacus-like highly sophisticated traps where even their creator Fabrice Tourre has no idea what they really do...)

If I left something out, feel free to complete my list. I am not an expert in financials, but I have some basic understanding of the markets thru my MBA training. These are, in my opinion, the essential services required from the banking sector and other than these, I don't think we need much of this financial "innovations" stuff. Those are mostly for making some serious extra money for the banking sector, but they don't offer anything resembling productive services to the economies.

So, don't buy into this crap that Paulson and other bankers are serving you. Think about the role of the banking sector. Its role is servicing the other sectors of economies and those other sectors of economies are the ones that take care of producing something and being productive.

Usually the gross domestic product - the GDP - is used to measured a nation's economy, its productivity and the rate of economic growth. That's a fairly good measure on how things work in our economies.

Now, how much do you think the banking sector adds to the GDP and economic growth? Exactly. Pretty close to NOTHING. Financial services are admittedly included in the GDP, as services. Services are, however, in the role of enablers in business and supporting the actual production. Consider the fact that the contribution of an item called "financial services and insurance" accounted to less than 10 percent of GDP in United States economy in 2009. Count out insurance and you probably end up with financial services accounting to less than 5 percent of GDP. See how little that could influence economic growth positively even if it was to produce something useful beyond basic services? Badly functioning banking sector may hinder economic growth, but it doesn't add anything to it, cause it doesn't produce anything, really. So much for financial "innovations"...