Category Archives: Debates

I engaged in long discussions on physics and philosophy through email and in Internet forums. Some of them are a bit nasty, but most were conducted in good taste. Here they are, both for your reading pleasure and my archival purposes.

GodA Personal Story

I want to wrap up this series on atheism with a personal story about the point in time where I started diverging from the concept of God. I was very young then, about five years old. I had lost a pencil. It had just slipped out of my schoolbag, which was nothing more than a plastic basket with open weaves and a handle. When I realized that I had lost the pencil, I was quite upset. I think I was worried that I would get a scolding for my carelessness. You see, my family wasn’t rich. We were slightly better off than the households in our neighborhood, but quite poor by any global standards. The new pencil was, to me, a prized possession.

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The Origins of Gods

The atheist-theist debate boils down to a simple questionDid humans discover God? Or, did we invent Him? The difference between discovering and inventing is the similar to the one between believing and knowing. Theist believe that there was a God to be discovered. Atheistsknowthat we humans invented the concept of God. Belief and knowledge differ only slightlyknowledge is merely a very very strong belief. A belief is considered knowledge when it fits in nicely with a larger worldview, which is very much like how a hypothesis in physics becomes a theory. While a theory (such as Quantum Mechanics, for instance) is considered to be knowledge (or the way the physical world really is), it is best not to forget the its lowly origin as a mere hypothesis. My focus in this post is the possible origin of the God hypothesis.

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Atheism and Unreal God

The only recourse an atheist can have against this argument based on personal experience is that the believer is either is misrepresenting his experience or is mistaken about it. I am not willing to pursue that line of argument. I know that I am undermining my own stance here, but I would like to give the theist camp some more ammunition for this particular argument, and make it more formal.

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Atheism vs. God Experience

I have a reason for delaying this post on the fifth and last argument for God by Dr. William Lane Craig. It holds more potency than immediately obvious. While it is easy to write it off because it is a subjective, experiential argument, the lack of credence we attribute to subjectivity is in itself a result of our similarly subjective acceptance of what we consider objective reason and rationality. I hope that this point will become clearer as you read this post and the next one.

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Atheism and the Morality of the Godless

In the previous post, we considered the cosmological argument (that the Big Bang theory is an affirmation of a God) and a teleological argument (that the highly improbable fine-tuning of the universe proves the existence of intelligent creation). We saw that the cosmological argument is nothing more than an admission of our ignorance, although it may be presented in any number of fancy forms (such as the cause of the universe is an uncaused cause, which is God, for instance). The teleological argument comes from a potentially wilful distortion of the anthropic principle. The next one that Dr. Craig puts forward is the origin of morality, which has no grounding if you assume that atheism is true.

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AtheismChristian God, or Lack Thereof

Prof. William Lane Craig is way more than a deist; he is certainly a theist. In fact, he is more than that; he believes that God is as described in the scriptures of his flavor of Christianity. I am not an expert in that field, so I don’t know exactly what that flavor is. But the arguments he gave do not go much farther than the deism. He gave five arguments to prove that God exists, and he invited Hitchens to refute them. Hitchens did not; at least, not in an enumerated and sequential fashion I plan to do here.

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Risk – Wiley FinCAD Webinar

This post is an edited version of my responses in a Webinar panel-discussion organized by Wiley-Finance and FinCAD. The freely available Webcast is linked in the post, and contains responses from the other participants — Paul Wilmott and Espen Huag. Una versione estesa di questo post potrebbe successivamente apparire come articolo nella rivista Wilmott,,en,Cos'è il rischio,,en,Quando usiamo la parola Rischio in una normale conversazione,,en,ha una connotazione negativa,,en,rischio di essere investiti da un'auto,,en,ma non il rischio di vincere una lotteria,,en,In finanza,,en,il rischio è sia positivo che negativo,,en,si desidera che l'esposizione a un certo tipo di rischio controbilanci un'altra esposizione,,en,stai cercando i rendimenti associati a un certo rischio,,en,in tale contesto,,en,è quasi identico al concetto matematico di probabilità,,en,Ma anche in finanza,,en,hai un tipo di rischio che è sempre negativo,,en,è Rischio Operativo,,en,Il mio interesse professionale in questo momento è ridurre al minimo il rischio operativo associato alle piattaforme di trading e computazionali,,en,Come misuri il rischio,,en.

What is Risk?

When we use the word Risk in normal conversation, it has a negative connotation — risk of getting hit by a car, for instance; but not the risk of winning a lottery. In finance, risk is both positive and negative. At times, you want the exposure to a certain kind of risk to counterbalance some other exposure; at times, you are looking for the returns associated with a certain risk. Risk, in this context, is almost identical to the mathematical concept of probability.

But even in finance, you have one kind of risk that is always negative — it is Operational Risk. My professional interest right now is in minimizing the operational risk associated with trading and computational platforms.

How do you measure Risk?

La misurazione del rischio alla fine si riduce alla stima della probabilità di una perdita in funzione di qualcosa,,en,tipicamente l'intensità della perdita e il tempo,,en,Quindi è come chiedere,,en,Qual è la probabilità di perdere un milione o due milioni di dollari domani o dopodomani,,en,La domanda se possiamo misurare il rischio è un altro modo per chiederci se possiamo calcolare questa funzione di probabilità,,en,In certi casi,,en,noi crediamo di poterlo fare,,en,nel rischio di mercato,,en,abbiamo ottimi modelli per questa funzione,,en,Il rischio di credito è una storia diversa,,en,anche se abbiamo pensato di poterlo misurare,,en,abbiamo imparato nel modo più duro che probabilmente non potremmo,,en,La domanda quanto sia efficace la misura,,en,secondo me,,en,come chiederci,,en,Cosa facciamo con un numero di probabilità,,en,Se faccio un calcolo di fantasia e ti dico che l'hai fatto,,en — typically the intensity of the loss and time. So it’s like asking — What’s the probability of losing a million dollars or two million dollars tomorrow or the day after?

The question whether we can measure risk is another way of asking whether we can figure out this probability function. In certain cases, we believe we can — in Market Risk, for instance, we have very good models for this function. Credit Risk is different story — although we thought we could measure it, we learned the hard way that we probably could not.

The question how effective the measure is, is, in my view, like asking ourselves, “What do we do with a probability number?” If I do a fancy calculation and tell you that you have 27.3% probabilità di perdere un milione domani,,en,cosa fai con quell'informazione,,en,Probabilità ha un significato ragionevole solo un senso statistico,,en,in eventi ad alta frequenza o grandi ensemble,,en,Eventi di rischio,,en,quasi per definizione,,en,sono eventi a bassa frequenza e un numero di probabilità può avere solo un uso pratico limitato,,en,Ma come strumento di determinazione del prezzo,,en,la probabilità precisa è grande,,en,soprattutto quando si quotano strumenti con una profonda liquidità di mercato,,en,Innovazione nella gestione del rischio,,en,L'innovazione in Risk si presenta in due gusti,,en,si è dalla parte del rischio,,en,che è nel prezzo,,en,rischio di immagazzinamento e così via,,en,Su questo fronte,,en,lo facciamo bene,,en,o almeno pensiamo di farlo bene,,en,e l'innovazione nella determinazione dei prezzi e dei modelli è attiva,,en,Il rovescio della medaglia è,,en,gestione del rischio,,en,Penso che l'innovazione sia effettivamente in ritardo rispetto agli eventi catastrofici,,en, what do you do with that piece of information? Probability has a reasonable meaning only a statistical sense, in high-frequency events or large ensembles. Risk events, almost by definition, are low-frequency events and a probability number may have only limited practical use. But as a pricing tool, accurate probability is great, especially when you price instruments with deep market liquidity.

Innovation in Risk Management.

Innovation in Risk comes in two flavors — one is on the risk taking side, which is in pricing, warehousing risk and so on. On this front, we do it well, or at least we think we are doing it well, and innovation in pricing and modeling is active. The flip side of it is, of course, risk management. Here, I think innovation lags actually behind catastrophic events. Una volta che abbiamo una crisi finanziaria,,en,facciamo un post mortem,,en,capire cosa è andato storto e provare a implementare le protezioni di sicurezza,,en,Ma il prossimo fallimento,,en,verrà da qualcun altro,,en,totalmente,,en,angolo inaspettato,,en,Qual è il ruolo del Risk Management in una banca,,en,L'assunzione di rischi e la gestione del rischio sono due aspetti dell'attività quotidiana di una banca,,en,Questi due aspetti sembrano in conflitto tra loro,,en,ma il conflitto non è casuale,,en,È attraverso la messa a punto di questo conflitto che una banca attua la sua propensione al rischio,,en,È come un equilibrio dinamico che può essere modificato come desiderato,,en,Qual è il ruolo dei fornitori,,en,i fornitori sembrano influenzare i processi piuttosto che le metodologie di gestione del rischio,,en,e in effetti di modellare,,en,Un sistema vended,,en,per quanto personalizzabile possa essere,,en,viene fornito con le proprie ipotesi sul flusso di lavoro,,en, for instance, we do a post-mortem, figure out what went wrong and try to implement safety guards. But the next failure, of course, is going to come from some other, totally, unexpected angle.

What is the role of Risk Management in a bank?

Risk taking and risk management are two aspects of a bank’s day-to-day business. These two aspects seem in conflict with each other, but the conflict is no accident. It is through fine-tuning this conflict that a bank implements its risk appetite. It is like a dynamic equilibrium that can be tweaked as desired.

What is the role of vendors?

In my experience, vendors seem to influence the processes rather than the methodologies of risk management, and indeed of modeling. A vended system, however customizable it may be, comes with its own assumptions about the workflow, gestione del ciclo di vita ecc,,en,I processi costruiti attorno al sistema dovranno adattarsi a questi presupposti,,en,Questa non è una brutta cosa,,en,Proprio alla fine,,en,i sistemi venduti più diffusi servono a standardizzare le pratiche di gestione del rischio,,en,Interpretazione,,en,Innovazione e implementazione,,en,Registrati al webinar,,en,Una tavola rotonda Wiley Global Finance con Paul Wilmott,,en,Con Paul Wilmott,,en,Espen Haug e Manoj Thulasidas,,hi,PER FAVORE,,en,UNISCITI A NOI,,en,PER QUESTO WEBINAR GRATUITO PRESENTATO DA,,en,FINCAD,,pt,E,,en,WILEY GLOBAL FINANCE,,en,Come ti identifichi,,en,misurare e modellare il rischio,,en,quali cambiamenti devono essere implementati per migliorare la redditività a lungo termine e la sostenibilità delle nostre istituzioni finanziarie,,en,Cogli un'opportunità unica per unirti a esperti del settore riconosciuti e rispettati a livello mondiale,,en,Espen Haug e Manoj Thulasidas in un libero,,zu. The processes built around the system will have to adapt to these assumptions. This is not a bad thing. At the very least, popular vended systems serve to standardize risk management practices.

The Big Bang TheoryPart II

After reading a paper by Ashtekar on quantum gravity and thinking about it, I realized what my trouble with the Big Bang theory was. It is more on the fundamental assumptions than the details. I thought I would summarize my thoughts here, more for my own benefit than anybody else’s.

Classical theories (including SR and QM) treat space as continuous nothingness; hence the term space-time continuum. In this view, objects exist in continuous space and interact with each other in continuous time.

Although this notion of space time continuum is intuitively appealing, it is, at best, incomplete. Consider, for instance, a spinning body in empty space. It is expected to experience centrifugal force. Now imagine that the body is stationary and the whole space is rotating around it. Will it experience any centrifugal force?

It is hard to see why there would be any centrifugal force if space is empty nothingness.

GR introduced a paradigm shift by encoding gravity into space-time thereby making it dynamic in nature, rather than empty nothingness. Thus, mass gets enmeshed in space (and time), space becomes synonymous with the universe, and the spinning body question becomes easy to answer. Yes, it will experience centrifugal force if it is the universe that is rotating around it because it is equivalent to the body spinning. And, no, it won’t, if it is in just empty space. But “empty spacedoesn’t exist. In the absence of mass, there is no space-time geometry.

So, naturally, before the Big Bang (if there was one), there couldn’t be any space, nor indeed could there be anybefore.Note, however, that the Ashtekar paper doesn’t clearly state why there had to be a big bang. The closest it gets is that the necessity of BB arises from the encoding of gravity in space-time in GR. Despite this encoding of gravity and thereby rendering space-time dynamic, GR still treats space-time as a smooth continuuma flaw, according to Ashtekar, that QG will rectify.

Now, if we accept that the universe started out with a big bang (and from a small region), we have to account for quantum effects. Space-time has to be quantized and the only right way to do it would be through quantum gravity. Through QG, we expect to avoid the Big Bang singularity of GR, the same way QM solved the unbounded ground state energy problem in the hydrogen atom.

What I described above is what I understand to be the physical arguments behind modern cosmology. The rest is a mathematical edifice built on top of this physical (or indeed philosophical) foundation. If you have no strong views on the philosophical foundation (or if your views are consistent with it), you can accept BB with no difficulty. Unfortunately, I do have differing views.

My views revolve around the following questions.

These posts may sound like useless philosophical musings, but I do have some concrete (and in my opinion, important) results, listed below.

There is much more work to be done on this front. But for the next couple of years, with my new book contract and pressures from my quant career, I will not have enough time to study GR and cosmology with the seriousness they deserve. I hope to get back to them once the current phase of spreading myself too thin passes.

What is Space?

This sounds like a strange question. We all know what space is, it is all around us. When we open our eyes, we see it. If seeing is believing, then the questionWhat is space?” indeed is a strange one.

To be fair, we don’t actually see space. We see only objects which we assume are in space. Rather, we define space as whatever it is that holds or contains the objects. It is the arena where objects do their thing, the backdrop of our experience. In other words, experience presupposes space and time, and provides the basis for the worldview behind the currently popular interpretations of scientific theories.

Although not obvious, this definition (or assumption or understanding) of space comes with a philosophical baggagethat of realism. The realist’s view is predominant in the current understanding of Einstien’s theories as well. But Einstein himself may not have embraced realism blindly. Why else would he say:

In order to break away from the grip of realism, we have to approach the question tangentially. One way to do it is by studying the neuroscience and cognitive basis of sight, which after all provides the strongest evidence to the realness of space. Space, by and large, is the experience associated with sight. Another way is to examine experiential correlates of other senses: What is sound?

When we hear something, what we hear is, naturally, sound. We experience a tone, an intensity and a time variation that tell us a lot about who is talking, what is breaking and so on. But even after stripping off all the extra richness added to the experience by our brain, the most basic experience is still asound.We all know what it is, but we cannot explain it in terms more basic than that.

Now let’s look at the sensory signal responsible for hearing. As we know, these are pressure waves in the air that are created by a vibrating body making compressions and depressions in the air around it. Much like the ripples in a pond, these pressure waves propagate in almost all directions. They are picked up by our ears. By a clever mechanism, the ears perform a spectral analysis and send electric signals, which roughly correspond to the frequency spectrum of the waves, to our brain. Note that, so far, we have a vibrating body, bunching and spreading of air molecules, and an electric signal that contains information about the pattern of the air molecules. We do not have sound yet.

The experience of sound is the magic our brain performs. It translates the electrical signal encoding the air pressure wave patterns to a representation of tonality and richness of sound. Sound is not the intrinsic property of a vibrating body or a falling tree, it is the way our brain chooses to represent the vibrations or, more precisely, the electrical signal encoding the spectrum of the pressure waves.

Doesn’t it make sense to call sound an internal cognitive representation of our auditory sensory inputs? If you agree, then reality itself is our internal representation of our sensory inputs. This notion is actually much more profound that it first appears. If sound is representation, so is smell. So is space.

Figure: Illustration of the process of brain’s representation of sensory inputs. Odors are a representation of the chemical compositions and concentration levels our nose senses. Sounds are a mapping of the air pressure waves produced by a vibrating object. In sight, our representation is space, and possibly time. However, we do not know what it is the representation of.

We can examine it and fully understand sound because of one remarkable factwe have a more powerful sense, namely our sight. Sight enables us to understand the sensory signals of hearing and compare them to our sensory experience. In effect, sight enables us to make a model describing what sound is.

Why is it that we do not know the physical cause behind space? After all, we know of the causes behind the experiences of smell, sound, etc. The reason for our inability to see beyond the visual reality is in the hierarchy of senses, best illustrated using an example. Let’s consider a small explosion, like a firecracker going off. When we experience this explosion, we will see the flash, hear the report, smell the burning chemicals and feel the heat, if we are close enough.

The qualia of these experiences are attributed to the same physical eventthe explosion, the physics of which is well understood. Now, let’s see if we can fool the senses into having the same experiences, in the absence of a real explosion. The heat and the smell are fairly easy to reproduce. The experience of the sound can also be created using, for instance, a high-end home theater system. How do we recreate the experience of the sight of the explosion? A home theater experience is a poor reproduction of the real thing.

In principle at least, we can think of futuristic scenarios such as the holideck in Star Trek, where the experience of the sight can be recreated. But at the point where sight is also recreated, is there a difference between the real experience of the explosion and the holideck simulation? The blurring of the sense of reality when the sight experience is simulated indicates that sight is our most powerful sense, and we have no access to causes beyond our visual reality.

Visual perception is the basis of our sense of reality. All other senses provide corroborating or complementing perceptions to the visual reality.

[This post has borrowed quite a bit from my book.]