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“Inside Job”–A Learning Experience and Documentary About Financial Algorithms-And Some of Same Exists in Healt

Posted Apr 03 2011 7:47pm

I finally had the opportunity to watch the movie, and it was very well done.  Below image is an interview with the film maker, Charles Ferguson with Charlie Rose.  He talks about how it was a story he wanted to tell.  As you see on this blog the word “algorithms” holds center stage and of course Wall Street is way far ahead on their use and if you watch the movie it is blatantly stated that “hey this way above what the average consumer could understand”, and I agree, it is and it’s not fair either. 

When you kind of reflect back here, they don’t even really know how to prosecute!  That part is scary and think of what we are doing in healthcare today, aggregating data just like what was done with investment banking. The shocker here was nobody realized how aggregated banking could snowball now that everything was attached and we had algorithmic cause and effect to create exactly what happened.  Long and short of it is that the banks all learned a hard lesson about aggregated financial data. 

After watching Wall Street and the Dennis the Menace type of behaviors that have occurred it should be a wake up call for us in healthcare as some of those same insurers own banks and have all kinds of financial investments that are actively traded on Wall Street, get it?   I wrote this article back in 2009, talking about algorithmic fraud rolling over into healthcare.  There’s a lot in common there with risk assessments and cost projection.  Look what happen when someone took a bit of their algorithmic code and he was eventually convicted. 

What’s making money in healthcare today, algorithms and whistle blowers, again from a couple years back here at the Quack. 

The 2 New Hot Words in Healthcare: Algorithms and Whistleblowers

Even AIG knew the power of the nerds years ago and when you watch the movie it is quite clear that the credit agencies use the word “our opinion” on almost every statement, legality thing I believe. 

AIG: You Bring the Nerds and the Algorithms and I’ll give you a AAA Rating…a little history from 1987

How Wall Street Lied to Its Computers – Software and Programming

Recently I have read about Goldman Sachs investing in medical records as they see that as a safe bet….hmmmm…could be and then could not be.  Healthcare algorithms are little different and the analysts may be not be on top of all as we have huge bubble of “consultants” raking in some big money.  We now have what is called REC centers that help doctors get started with medical records and for vendors to be on the list they have so sign contracts and thus so their selling price can be cut almost in half, very interesting as it is serving a purpose for the government and doctors, but not maybe for investors all the way around as in time this could have some impact on profit margins not too far down the road. 

Banks had ton loads of money to make their systems and exchanges talk to each other, well not so the case with medical records and in come the expensive consultants.  How lucrative is this?  Pretty good as United and Aetna have bought up a lot of companies that make this happen and the cost is not cheap, but more money to the bottom line for shareholders.  Now there are also government grant and funded efforts here as well and how are they going to compete?  We don’t really know that yet and they may have to end up paying the consultants to come in and make their systems work at some point in time too. 

Back to the medical record software vendors who have to provide meaningful use according to government standards to offer a “connected” system.  When a hospital or physician wants to buy a “connected” system, and keep in mind just simply due to technology this changes all the time, who pays for that?  In order to keep a certified and connected software package out there, we come back to the medical record vendor, so the consultants win again.  Now just in case they don’t have the right proprietary connection, the “consultants” offer their services directly to cash stripped hospitals to help them out, consultants win again and more money for the share holders.  I don’t think anyone has maybe said this, but it kind of is what it is.

The bubble is growing.  In addition, we see all this talk about innovation and government and many others seem to be stuck at this level as innovation takes care of itself, but what we need in collaboration and that takes a concerted effort.  We don’t see much of that and I base it on all the “Junker” software that keeps emerging for consumers that nobody uses or even cares about.  I see a lot of investing on intangible algorithms not tied to any tangibles and they keep building on each other with aggregation and guess what, just like the aggregated financial data was all connected, well this too will crash with all the money attached to a bunch of algos.  Some are also very short lived too, just simply due to technology.    Sure there’s some value but not the over inflated valuations we are seeing for social networks as what good are they if we don’t end up with something tangible along the way.  Communication and sharing is bringing together a global communication effort but as a country we still need tangibles in order to have jobs and create some wealth. 

Health IT The Next Bubble and How Long Will It Take to Pop–Probably When The Money Runs Out

In the meantime, digital illiterate lawmakers at all levels who keep trying to figure out how many more ways they can get additional dollars from these hospitals?  Does that make sense?  I read almost every day doing my research and reading for this blog.  But based on the success of algorithmic codes for profits, insurers are dead set that more algorithms will help the cause here and certainly there are some cost saving benefits, but maybe not to the effect that is has been spoken. 

Health Care Insurers Suggest Algorithms and Business Intelligence solutions to provide health insurance solution

Here’s one company, division of United, that short paid patients and doctors for out of network charges for around 10 years that has a ton of lawsuits either settled or still pending based on low balling algorithmic formulas for payment.  Andrew Cuomo was the hero here who took them to task and yet we still think their algorithms are ok even though in other areas of auditing? 

For healthcare and Wall Street, it may not be a bad idea of create something like this, a Department of Algorithms and of course they would need to be digital so even the lowest common denominator in digital literacy could get the picture by watching an algorithm run, while still protecting the patent and source code.  Harry Markopoulos was a good example of that need with his testimony and the link below has the video that can refresh your memory if needed. 

Even judges these days get confused on their investments as with all the mergers and acquisitions taking place daily, an investment 2 years ago that was safe just may be a conflict of interest today. 

Let’s not forget the high frequency guys here too as they are in there for a quick trade and speed and co-lo computers are how they do it, usually models made by Cray Computers that kick butt big time.  “It is a technological arms race in financial markets and the regulators are a bit caught unaware of how quickly the technology has evolved, and sometimes, too much technology without the ability to manage it effectively can yield some unintended consequences.

High Frequency Electronic Trading Methodologies And Algorithms Work Their Way Into Healthcare With Human Bodies Losing Liquidity With the “Data Game”

And then we have what I call the “Dennis the Menace” type of bad boy behavior that goes on with over clocking servers for speed.  Does this fall under what might be called “best practices” when it could melt?  I saw enough games melt their PC processors when I did some training for Intel, so multiply that up to big server levels.  Do you think a hospital would over clock their servers…hell not and any of those who are CIOs at a hospital will choke and laugh at even the idea of this.  Shoot NASDAQ even gets hacked with their “private” network they sell to other companies for secure communications and doesn’t immediately notify those using it, some are healthcare companies, they don’t care. 

Here’s the trailer for the movie to give you an idea of the format and it is narrated by Matt Damon. 

Digital illiteracy by US lawmakers all over the US is a big problem and we desperately need those folks to catch up so they can make meaningful laws.  I don’t know about you but I am so tired of the OMG crap and antics that I see in the news and that is old style reporting for the most part and occasionally still has a place of course but not in Washington.  Save it for the dog that rides surfboards with Charlie Sheen or something along that line.

I really do want IBM Watson in there to help them as even the lowest common denominator that we elect could use speech recognition for some queries and be miles ahead and be productive.  They need these types of tools to where the computer learns and can get faster, quicker and more accurate results for them and use it on a regular basis.  The one little fun test time was ok, but it’s needed as a regular resource.  If they don’t get it, you can almost bet by now Wall Street has it installed, hint to the SEC as well here. 

I had my own little version of what I thought happened from a software/processor/hardware side and it is just that as I read what everyone else did too, but it is possible and the general public is pretty much obvious to how much IT relies on back up as IT folks make it look so seamless, but mirrored servers are popping in and out all the time to make it appear this way and as a user on the web you don’t even see it or might see a small flicker. 

Was a Server Fail Over Taking Place on Wall Street During a “Perfect Storm” of Heavy Transactions?

One other item covered by the last part of the movie is the effect this has all had on teaching economics in college today and how that has been skewed to be a far cry too from how it used to exist.  Pay real attention to the last section especially if you have kids that want to focus or major in economics as it is real eye opener as well and nice that they included this often overlooked consequence of the changed word of algorithms.  I watched a video this image weekend from a convention in San Francisco about various young vendors with a Capital firm and the first question asked was are you here to contribute or here to break the system, and sadly the latter answer was almost unanimous from young start up companies.  They were talking about intangible capital, the danger zone and they went a step further to call it “invisible”.  If you have not seen or heard anything like this, listen up because these conversation are going on all over the place. 

Ok well if you have hung in here this far, there’s a website that has a streaming legal copy of “Inside Job” you can watch and I’ll give you the link below.  You can also purchase from Amazon as well. The site suggests if you find it of value to consider contributing if you can as documentaries take money like everything else today to create.  It’s well worth the watch for the education process and keep in mind it’s all those algorithms they created that made financial robbery possible.  The live streaming full video is courtesy of Open Culture”.   BD 

From the Website:

“Inside Job (now listed in our Free Movie collection) can be purchased on DVD at Amazon . We all love free, but let’s remember that good projects cost real money to develop, and they could use real financial support. So please consider buying a copy. image

Hopefully watching or buying this film won’t be a pointless act, even though it can rightly feel that way. As Charles Ferguson reminded us during his Oscar acceptance speech, we are three years beyond the Wall Street crisis and taxpayers (you) got fleeced for billions. But still not one Wall Street exec is facing criminal charges. Welcome to your plutocracy…”

You need to watch the movie Inside Job if you care about the country. No you need to watch it and tell other people to watch it too.

Even after seeing this movie and watching this clip I find it amazing that so many academics failed to disclose that they were being paid. I was at one time a history graduate student and it isn't that unusual for someone to get a grant or foundation money to do real research and write something - and those people are always thanked or disclosed in the final works.

And in the financial world if someone is being paid to promote a security they have to disclose it. It's part of SEC regulations. The behavior of Miskin and others borders on violating that law if it does not already.


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