A great free community concert last weekend, to celebrate 125 years of the Salvation Army in Bundamba, Queensland, held in the Ipswich Civic Hall. The hall is relatively new and has an interesting shape and footprint: outwardly-opening tiered fan-shaped for the stage and the front half of the hall, leading to a square box at the back, and having multiple box-shaped extrusions on the walls; the seating was flat on the wooden floor in the front, with demountable and translatable tiered-seating in the back. About 2/3 of the hall was used for this concert, the movable rear wall being translated forward. The acoustics were surprisingly good, at least in the front half, even though the sound was amplified.
The performers included four groups: the prize-winning Brisbane Excelsior Brass Band, one of Australia’s (and the world’s) best; the 125-year-old Blackstone-Ipswich Cambrian Youth Choir, a legacy of the area’s 19th-century Welsh coal-miners; the young jazz ensemble Jazz Effect; and Bundamba Quartette, a mature male barbershop quartet. Jazz Effect comprised 4 trumpets, 3 trombones, 4 saxes (tenor and alto), 2 guitars, drums, keyboards, an occasional singer (who also doubled on bongos for one number), and a flugel-horn-playing conductor. Most of the performances were very good, although I think the Jazz Effect vocalist could have benefited from a tuning fork. The music ranged from popular numbers to favourite Salvation Army hymns. Although no national anthem was played, the audience was asked to join the singing of one hymn at the end of the evening. The impact of the Salvos on Australian brass music is not something to be under-estimated, as the personal links between the various musicians, the groups, and even the compere Greg Aitken (himself head of brass at the Queensland Conservatorium) demonstrated. An off-duty statistician might have estimated the audience at about 200-strong.
Some of these performers were later seen here.
Monthly Archives: August 2011
Networks of Banks
The first plenary speaker at the 13th International Conference on E-Commerce (ICEC 2011) in Liverpool last week was Robert, Lord May, Professor of Ecology at Oxford University, former Chief UK Government Scientific Advisor, and former President of the Royal Society. His talk was part of the special session on Robustness and Reliability of Electronic Marketplaces (RREM 2011), and it was insightful, provocative and amusing.
May began life as an applied mathematician and theoretical physicist (in the Sydney University Physics department of Harry Messel), then applied his models to food webs in ecology, and now finds the same types of network and lattice models useful for understanding inter-dependencies in networks of banks. Although, as he said in his talk, these models are very simplified, to the point of being toy models, they still have the power to demonstrate unexpected outcomes: For example, that actions which are individually rational may not be desirable from the perspective of a system containing those individuals. (It is one of the profound differences between Computer Science and Economics, that such an outcome would be unlikely to be surprising to most computer scientists, yet seems to be so to mainstream Economists, imbued with a belief in metaphysical carpal entities.)
From the final section of Haldane and May (2011):
The analytic model outlined earlier demonstrates that the topology of the financial sector’s balance sheet has fundamental implications for the state and dynamics of systemic risk. From a public policy perspective, two topological features are key.
First, diversity across the financial system. In the run-up to the crisis, and in the pursuit of diversification, banks’ balance sheets and risk management systems became increasingly homogenous. For example, banks became increasingly reliant on wholesale funding on the liabilities side of the balance sheet; in structured credit on the assets side of their balance sheet; and managed the resulting risks using the same value-at-risk models. This desire for diversification was individually rational from a risk perspective. But it came at the expense of lower diversity across the system as whole, thereby increasing systemic risk. Homogeneity bred fragility (N. Beale and colleagues, manuscript in preparation).
In regulating the financial system, little effort has as yet been put into assessing the system-wide characteristics of the network, such as the diversity of its aggregate balance sheet and risk management models. Even less effort has been put into providing regulatory incentives to promote diversity of balance sheet structures, business models and risk management systems. In rebuilding and maintaining the financial system, this systemic diversity objective should probably be given much greater prominence by the regulatory community.
Second, modularity within the financial system. The structure of many non-financial networks is explicitly and intentionally modular. This includes the design of personal computers and the world wide web and the management of forests and utility grids. Modular configurations prevent contagion infecting the whole network in the event of nodal failure. By limiting the potential for cascades, modularity protects the systemic resilience of both natural and constructed networks.
The same principles apply in banking. That is why there is an ongoing debate on the merits of splitting banks, either to limit their size (to curtail the strength of cascades following failure) or to limit their activities (to curtail the potential for cross-contamination within firms). The recently proposed Volcker rule in the United States, quarantining risky hedge fund, private equity and proprietary trading activity from other areas of banking business, is one example of modularity in practice. In the United Kingdom, the new government have recently set up a Royal Commission to investigate the case for encouraging modularity and diversity in banking ecosystems, as a means of buttressing systemic resilience.
It took a generation for ecological models to adapt. The same is likely to be true of banking and finance.”
It would be interesting to consider network models which are more realistic than these toy versions, for instance, with nodes representing banks with goals, preferences and beliefs.
References:
F. Caccioli, M. Marsili and P. Vivo [2009]: Eroding market stability by proliferation of financial instruments. The European Physical Journal B, 71: 467–479.
Andrew Haldane and Robert May [2011]: Systemic risk in banking ecosystems. Nature, 469: 351-355.
Robert May, Simon Levin and George Sugihara [2008]: Complex systems: ecology for bankers. Nature, 451, 893–895.
Also, the UK Government’s 2011 Foresight Programme on the Future of Computer Trading in Financial Markets has published its background and working papers, here.
Biedermeier Orientalism
Listening to Mendelssohn’s Auf Flugeln des Gesanges (“On Wings of Song”), a setting of a poem by Heinrich Heine, I am reminded of the composer’s orientalism. The poem expresses a deep interest in orientalist thought; indeed, the words are quite remarkable for their cosmopolitan and surrealist flavour.
Mendelssohn was well-read in Asian thought, particularly Hindu and Sufist philosophy, and was close friends with Friedrich Rosen (1805-1837), an orientalist and first Professor of Sanskrit at University College London (appointed at age 22). In his letters, too, Mendelssohn recommended to his brother Paul a book of Eastern mystic aphorisms by another orientalist, Friedrich Ruckert, saying this book, (“Erbauliches und Beschauliches aus dem Morgenlande” – Establishments and Contemplations from the Orient), provided “delight beyond measure” (Letter of 7 February 1840). (At roughly the same time, of course, Thoreau and the other New England Transcendentalists were also being strongly influenced by orientalist ideas and literature.) Mendelssohn was well-read in theology and philosophy generally, and particularly influenced by the ideas of Friedrich Schleiermacher. There is something more profound here in Mendelssohn’s thought and music than is usually noticed by people who dismiss his music (and often Biedermeier culture generally) as being lightweight and superficial. That an activity is inward-focused does not make it light or superficial; indeed, the reverse is usually true.
Among the more there that is here, I believe, is a relationship between Sufist ideas and Mendelssohn’s love of repetition, something one soon hears in his melodies with their many repeated notes. A similar relationship exists between JS Bach’s fascination with Pietism, and his own love of repetition, as in the first movement of the D Minor Piano Concerto (BWV 1052), or the proto-minimalism of, for example, Prelude #2 in C minor, in Book 1 of the 48 (The Well-Tempered Clavier).
Those dismissing Mendelssohn for being superficial included, famously, Richard Wagner, whose criticisms were certainly motivated by anti-semitism, jealousy, and personal animosity. But I wonder, too, if Wagner – that revolutionary of ’48 – was also dismissive of what he perceived to be the inward-focus of the Biedermeier generation, a generation forced to forego public political expression in the reimposition of conservative Imperial rule after the freedoms wrought by Napoleon’s armies. But not speaking one’s political mind in public is not evidence of having no political mind, as any post-war Eastern European could tell you. While visiting Paris in the 1820s, Mendelssohn attended sessions of the French National Assembly. While in London in 1833, he attended the House of Commons to observe the debate and passage of the bill to allow for Jewish emancipation, writing excitedly home about this afterwards. (Sadly, the bill took another three decades to pass the Lords.)
In July 1844, while again in London, Mendelssohn was invited to receive an Honorary degree from Trinity College Dublin, and hearing that he would be going to Dublin, Morgan O’Connell, son of Irish nationalist Daniel O’Connell, asked him to take a letter to his uncle, then in a Dublin prison. (As it happened, Mendelssohn was unable to go to Ireland on that occasion. See: letter to his brother Paul, 19 July 1844, page 338 of Volume 2 of Collected Letters.) One wonders how O’Connell could ask of someone such a favour, without first knowing something of the man’s political sympathies. So perhaps those sympathies were radical, anti-colonial and republican. In an earlier letter, Mendelssohn described standing amidst British nobility with his “citizen heart” in an audience at the Court of Victoria and Albert (Letter of 6 October 1831). As these incidents reveal, there may have been much more to this Biedermeier mister than meets the eye.
Vale Robert Oakeshott
The Guardian today carries an obituary for Robert Oakeshott (1933-2011), pioneer of worker-cooperatives and employee-owned enterprises, whom I once invited to speak at the University of Zimbabwe and with whom I then spent an enjoyable dinner in Harare, at a time when the Government of Zimbabwe was sincerely promoting industrial and agricultural worker co-operatives, supported by many western aid donor agencies.