____________________________________
● Kolmogorov's zero-one law [ ]
[0or1]
http://en.wikipedia.org/wiki/Long_tail
http://en.wikipedia.org/wiki/Kolmogorov%27s_zero%E2%80%93one_law
Kolmogorov's zero-–one law
certain type of event, called a tail event, will either almost surely happen or almost surely not happen; that is, the probability of such an event occurring is [either] zero or one. [Not to be mixed up with between zero and one, exclusive.] [By the way, this type of tail event is very much like getting cancer and getting hit by a bus on a Tuesday at 8 o'clock in the morning; from your perspective, you getting or not getting cancer is like being pregnant; either you have it (1) or you don't (0); there is no in between.]
http://en.wikipedia.org/wiki/Benoit_Mandelbrot
They were there, even though nobody had seen them before. It's marvelous, a very simple formula explains all these very complicated things. So the goal of science is starting with a mess, and explaining it with a simple formula, a kind of dream of science.[8]
http://en.wikipedia.org/wiki/Andrey_Kolmogorov
On October 2012, Anat Admanti and Martin Hellwig completed their book, The bankers' new clothes : what's wrong with banking and what to do about it, © 2013.
I shall quote a line that caught my attention, on page 312, Note 62, “. . . that mortgage borrows often are likely to FAIL Together or NOT at all.”--the full original TEXT, “A major flaw of the entire approach is that it assumes that risks are independent. Cor-relations are neglected, for example, those due to the fact that mortgage borrows often are likely to fail together or not at all.” In other words, this is dominos; tip one over and the cascading effect will cause the rest of the dominos to fall, all for one and one for all.
http://www.alternet.org/corporate-accountability-and-workplace/10-reasons-millennials-are-screwed-generation
====================================================
Likely to fail together (1) or not at all (0)
by Anat Admanti and Martin Hellwig
----------------------------------------------------
A major flaw of the entire approach is
that it assumes that risks are independent.
Cor-relations are neglected, for example,
those due to the fact that mortgage borrows
often are likely to fail together or not at all.
====================================================
fail together or not at all (BNC)
“ ”
Note 62
p.312
Under Basel III as well as Basel II, there are three “pillars” of banking supervision.
Pillar 1 concerns capital regulation,
pillar 2 the professional quality of banking, and
pillar 3 “market discipline.”
Of these three pillars, pillar 1 is most important because it involves hard rules for capital requirements. Pillar 1 distinguishes assets depending on whether they are held in the “banking book” or the “trading book” of the bank; assets in the banking book are meant to be held until they are repaid, where as assets in the trading book are available for resale at an opportune moment. For each category, banks can choose whether they want to use a “standard approach,” with risk weights specified in the regulations, or, for credit risks, an “internal ratings-based” approach and, for assets in the trading book, a model-based approach to determine the capital required. The zero-risk-weights rule for government debt is given in the regulations for the standard approach to credit risk. A major flaw of the entire approach is that it assumes that risks are independent. Cor-relations are neglected, for example, those due to the fact that mortgage borrows often are likely to fail together or not at all.
(The bankers' new clothes : what's wrong with banking and what to do about it, by Anat Admanti and Martin Hellwig, © 2013, p.312)
____________________________________
● Kolmogorov's zero-one law [ ]
[0or1]
http://en.wikipedia.org/wiki/Long_tail
http://en.wikipedia.org/wiki/Kolmogorov%27s_zero%E2%80%93one_law
Kolmogorov's zero-–one law
certain type of event, called a tail event, will either almost surely happen or almost surely not happen; that is, the probability of such an event occurring is [either] zero or one. [Not to be mixed up with between zero and one, exclusive.] [By the way, this type of tail event is very much like getting cancer and getting hit by a bus on a Tuesday at 8 o'clock in the morning; from your perspective, you getting or not getting cancer is like being pregnant; either you have it (1) or you don't (0); there is no in between.]
http://en.wikipedia.org/wiki/Benoit_Mandelbrot
They were there, even though nobody had seen them before. It's marvelous, a very simple formula explains all these very complicated things. So the goal of science is starting with a mess, and explaining it with a simple formula, a kind of dream of science.[8]
http://en.wikipedia.org/wiki/Andrey_Kolmogorov
On October 2012, Anat Admanti and Martin Hellwig completed their book, The bankers' new clothes : what's wrong with banking and what to do about it, © 2013.
I shall quote a line that caught my attention, on page 312, Note 62, “. . . that mortgage borrows often are likely to FAIL Together or NOT at all.”--the full original TEXT, “A major flaw of the entire approach is that it assumes that risks are independent. Cor-relations are neglected, for example, those due to the fact that mortgage borrows often are likely to fail together or not at all.” In other words, this is dominos; tip one over and the cascading effect will cause the rest of the dominos to fall, all for one and one for all.
http://www.alternet.org/corporate-accountability-and-workplace/10-reasons-millennials-are-screwed-generation
====================================================
Likely to fail together (1) or not at all (0)
by Anat Admanti and Martin Hellwig
----------------------------------------------------
A major flaw of the entire approach is
that it assumes that risks are independent.
Cor-relations are neglected, for example,
those due to the fact that mortgage borrows
often are likely to fail together or not at all.
====================================================
fail together or not at all (BNC)
“ ”
Note 62
p.312
Under Basel III as well as Basel II, there are three “pillars” of banking supervision.
Pillar 1 concerns capital regulation,
pillar 2 the professional quality of banking, and
pillar 3 “market discipline.”
Of these three pillars, pillar 1 is most important because it involves hard rules for capital requirements. Pillar 1 distinguishes assets depending on whether they are held in the “banking book” or the “trading book” of the bank; assets in the banking book are meant to be held until they are repaid, where as assets in the trading book are available for resale at an opportune moment. For each category, banks can choose whether they want to use a “standard approach,” with risk weights specified in the regulations, or, for credit risks, an “internal ratings-based” approach and, for assets in the trading book, a model-based approach to determine the capital required. The zero-risk-weights rule for government debt is given in the regulations for the standard approach to credit risk. A major flaw of the entire approach is that it assumes that risks are independent. Cor-relations are neglected, for example, those due to the fact that mortgage borrows often are likely to fail together or not at all.
(The bankers' new clothes : what's wrong with banking and what to do about it, by Anat Admanti and Martin Hellwig, © 2013, p.312)
____________________________________
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