Well this is what the CEO told investors and you know what, if I were a share holder or investor with the bank, I would be asking about this.  How is it that you were out modeled by an HMO insurance company?  Now that has to be a low blow to the belt as the banks normally have the best modelers money can buy and smart.  The US government gets socked by them all the time, as I write about it here.  This is as bad as Jamie Dimon saying “I don’t know” when asked about the JPMorgan models. 

The CEO must have blinders on here with his comment that “you don’t expect a company that is so visible to do this”…well it’s been going on for a long time and now more information on data mechanics is surfacing as those who have seen this going south are talking about it, warning us.  Want to talk sub prime anyone?   His quote is exactly what I attempt to help consumers with in learning how some of this works and you don’t need to be a mathematician or quant, programmer or anything else to acknowledge this occurs, just don’t be bliss.  So an HMO got the best of a bank…what a surprise. 

“If you look back to what is the lesson learned?” Kanas queried: “If somebody will completely fabricate a story it’s tough to figure it out.”

In reality this business has become so bad with lying models, the real people who have the talent to create such (and it’s not the executives or front office folks that make big money either) the Quants have their own code of ethics so they don’t get looped in any longer with writing code and models that they know are not accurate.  They are hired to do a job and don’t want to be put in the corner to where they are to lie with numbers for profit.  We need to listen to the talented people as they create good stuff too and there are models that work and have levels of accuracy and don’t just lie for profit. 

Big Data–The Data Science Code of Ethics-Designed By Those Who Create Models - Don’t Fall Victim To Write Fictitious Code and Models Just to Make Money With Clients Demanding Such

All you have to do to see the fear of having talent even at the government level of coming out of bliss is watch the PBS special, the Untouchables.  Listen to DOJ Manny talk and there is zero level of confidence in his tone of voice and what he says.  Anyone in tech can pick that up with listening for 5 minutes. 

“The Untouchables-Too Big to Jail” Frontline Documentary Shows Department of Justice’s Fear of Prosecuting Big Banks–No Confidence In Using Current Day Technologies To Investigate –Video

Scroll down again to the bottom and watch the documentary “Quants, the Alchemists of Wall Street” and you will see Emanuel Derman and Paul Wilmott discuss their code of ethics they came up with a long time ago.  They wrote their Financial Modeler’s Manifesto after the financial crisis…see both tin the Quants video at the bottom of this page.  They both tell you how common sense drops and that a major rethink is needed before we have a mathematical market meltdown.  If the market melts down with math, so does healthcare as so many are traded on the open markets, same thing.  Pay attention to some critical words…an illusion of understanding..

(b) A data scientist shall rate the quality of data and disclose such rating to client to enable client to make informed decisions. The data scientist understands that bad or uncertain data quality may compromise data science professional practice and may communicate a false reality or promote an illusion of understanding. The data scientist shall take reasonable measures to protect the client from relying and making decisions based on bad or uncertain data quality.

The best quote out of the Quant documentary is Mike Oslinski though “you can do anything with software” and he’s the guy who wrote the software that all banks used and modified for their sub prime mortgage schemes.  Banks and insurance companies are really just software companies anymore that have the power to create the ones that move money to their pockets.  They feed on the fear of math with consumers and sometimes the government too.  This is huge substantiation to agree with some Australian bankers, half of all the analytics created will be waste of money.

So the HMO, Universal Health Care had some real talent working there to outsmart a bank I think.  It’s all about greed of course once again.  You can look at the want ads today for health insurance companies and they want to hire more quants, data miners, and so forth and you do have to stop and ask the question, when is enough enough? Why do you think policies are going up all the time as this is not cheap work with digging and digging through tons of data bases hoping to find that one little tiny illustrious link with non linear methods.  Science does this and it’s what they do and is accepted as that is what science is and it takes years and years of research and trial and error, but with flawed data and models that are already out there in the financial world, do you think this same process is emulated the same here, of course not.  On top of that everyone seems to think that “you just run out to the code kitchen cook up some money making models in a short amount of time..doesn’t work that way

Well I guess we might be in for a ride to see if we see the repeating as the talent and quants with insurers is increasing and maybe the banks have met their modeling matches…insurance companies?  I call a lot of this activity we see today, “Algo Duping” and hey might be a better name for this process at some point in time but for now this what I call it.  BD



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