Iris Mack knows a thing or two about derivatives:
If we’ve made any progress as a nation since the crisis, it’s that people these days know the word “derivatives.” They may not know exactly what it means, but that’s okay, because as I like to tell them, the most powerful men in the world didn’t really know a whole lot about them until the damned things blew up the financial system.
Then I often wind up explaining how I got to learn this early on, after the company where I’d been employed trading energy derivatives blew up and I took a job at Harvard, where former Treasury Secretary Larry Summers had just been named president. My job was at Harvard Management Company, which “manages” the university’s twenty something billion dollar endowment. They used to have thirtysomething billion, but from what I saw they weren’t the most stringent risk “managers,” specifically when it came to derivatives.
Derivatives aren’t conceptually that complicated: they’re mainly just side-bets that the price of some other thing will rise or fall over a certain time horizon based on some “underlying asset”. That’s why they are called derivatives: their value is derived from another asset - like a stock, a commodity, etc. — the stuff Eddie Murphy learned about in the movie Trading Places.
Iris Mack is a woman economist. Also African American and movie star beautiful. And her blog on HuffPost Business in and of itself is a complete education on economics in America.
And, I’ve got to include her commentary on Brooksley Born:
Of course, the original sin by which they were able to do all this stuff without “recognizing” it on the books in the first place was the whole “derivatives” conundrum we started with. Had the complicated derivatives with which they dumped garbage into and out of the books been overseen by any government and/or grownups, they probably wouldn’t have even tried to get away with it. But Bob Rubin (along with Alan Greenspan and my old boss Larry Summers) had brutally struck down the first and last serious government plan to regulate them - the proposal advanced by former Commodity Futures Trading Commission chief Brooksley Born weeks before LTCM blew up in 1998.
God! I love women economists!
But, Iris Mack is more than a mere economist. She lectures consulting psychologists on the liabilities of closed organizational systems and risky investment practices:
Dr. Iris Mack will tell consulting psychologists how she turned a career crisis battling Harvard University and the Harvard Management Company (HMC) into life lessons and a new business, and will discuss implications for businesses in today's global economy.
Dr. Mack will share rich experiences about the liabilities of closed organizational systems like she encountered at HMC. There, her verbal and written warnings of risky investment practices – based on her previous derivatives and investment experiences at Enron, London Investment Banque BNP Paribas, Salomon Brothers and Charles Schwab – not only went unheeded but led to her firing. She will tell how the traumatic aftermath fueled her resiliency and desire to overcome adversity, leading her to develop a new and rewarding career.
"In 2002, when I corresponded with Larry Summers' office about my concerns over derivatives use in the endowment, I was just trying to do my job," Dr. Mack said. "It's a bit surreal what we are experiencing today: loss of billions of dollars in Harvard's endowment, a global recession, high unemployment, millions of home foreclosures, IRS auditing Harvard, etc. – all due to the use of financial WMDs [Weapons of Mass Destruction]!" She also notes that "experiences such as Katrina and the recent earthquakes and aftershocks in Haiti help one put his/her problems in perspective and to deal with adverse situations."
There is more of her impressive bio in the above article, which elsewhere also includes a physics footnote:
She has also spent some of her professional career at NASA, Boeing and AT&T Bell Laboratories, where she obtained a patent for research on optical fibers.
Her actual accomplishments, compared with the self-burnishments of Larry Summers, makes him look like a piker. To give her her due, she is not perfect. Playwright Nancy McClernan researching her as a figure in a possible play based on an economist Brooksley Born-like character …
So I was prepared to love Iris Mack. And I'm planning to create a character based on her for my play - she's brainy, beautiful, ground-breaking (the second African-American woman to get a doctoral in Math from Harvard), a fan of whistle-blowers - she gave a shout-out to Brooksley Born, and gave grief to two out of the three members of the evil Trio (Greenspan, Rubin, Summers). But I should have worshiped her from afar. Instead I tracked her Facebook profile down and friended her….
In case you don't recognize that guy, he's Ben Carson, the right-wing homophobe who was so rude to Obama. Mack appears to love Carson as much as she despises Obama. Carson was so inappropriate that even Fox News' Cal Thomas said so.
…. She also "likes" both Mitt Romey and Ron Paul, although she appears to be much more of a Libertarian than a Republican, she has much more pro-Ron Paul stuff on her page.
Alas! And, alack!