Not Even Wrong

This posting will quickly veer far off the usual topics of this blog into political issues that I normally avoid like the plague. For once, the issues involved seem important enough to interrupt your regularly-scheduled programming. I hope to not ever repeat this in future postings.

Over the last 20 years I’ve seen an increasingly large number of colleagues, students and friends leave academia to go to work in the financial industry. Many were hired as “quants”, working on mathematically sophisticated models for valuing various financial instruments. During the same period, I’ve watched New York City change in dramatic ways, driven by the vast wealth flowing into the financial industry here. I’ve seen recent estimates that half the personal income on the island of Manhattan has been going to the 20 percent or so of the population that work in finance-related jobs. The effects of this wealth include something like a five-fold increase in apartment prices, with a modest two-bedroom apartment now selling for a million dollars. In many neighborhoods, a majority of the people on the sidewalks have a net worth above a million, and annual incomes of many hundreds of thousands of dollars. Not surprisingly, the streets are clean, buildings shiny and beautifully renovated, restaurants excellent and street crime non-existent. Banks have opened huge branches on every street corner.

For many years I couldn’t figure out where all this money was coming from. When I’d ask people about this, I’d get a list of some of the things generating investment banking fees, but none of these seemed to add up to something that could provide the profits necessary to pay million-dollar bonuses to tens of thousands of people. Over the last year or so, the so-callled “credit crisis” has started to make clear what has been going on, and I (like many others, I suspect) have spent more time than is healthy following the story as it has unfolded.

It’s a very complicated subject, but the most important part of it is relatively easy to understand, and there’s not much disagreement about this. Starting about 10 years ago, housing prices in the United States began to increase dramatically, fed by low interest rates, and easy credit. A classic financial bubble developed as people borrowed ever-increasing amounts of money to invest in housing, sure that prices would keep going up. You can make a lot of money very fast this way. In 2006, housing prices nationwide had increased by a factor of 2.5 over the past ten years. This was the peak of the bubble and since then prices are off by 25%. They will still have to come down another 25% or so to get back to pre-bubble levels (inflation-adjusted).

The fall in prices has made a lot of housing worth less than the loans secured by it. More and more people have mortgages that cannot be refinanced and that they sometimes cannot afford, leading to foreclosure, or to a strong incentive to just leave and give the housing back to the bank. It turns out that one of the things the quants had been doing was developing pricing models for complex ways to market the risk associated with these loans. One of the sources of the huge income coming into Manhattan was the fees that this generated. The models being used turned out to be highly flawed, dramatically underestimating the fall-out from the all-too likely end to the bubble.

Since more than a couple ex-string theorists were involved in this, there’s a temptation to make an analogy with the complicated failed models that they were trained in working on during their years in academia, but that would be highly unfair. Most of the flawed models were developed by people whose training had nothing to do with string theory, with the flaws coming from certain built-in assumptions. These assumptions were chosen because they allowed a lot of money to be made in the short-term, making many Manhattanites quite wealthy.

Now that the bubble has burst and it has become clear that the financial instruments created are worth far less than anyone had expected, the fundamental problem is that, absent some optimism about a turn-around in prices, it is likely that many US financial institutions are insolvent. Their assets may be worth less than their liabilities (depending on exactly how low housing prices go). As a result, their stock prices have collapsed, and no one is much interested in investing more money in them. The situation has gotten so bad in recent weeks that the normal operation of the credit markets is in danger of coming to a halt, as institutions stop trading with others out of fear that they will soon be bankrupt.

Today the Bush administration put out draft legislation to deal with the problem (see here). The solution proposed is strikingly simple: the Secretary of the Treasury will be given $700 billion to hand over to financial institutions in return for mortgage-related financial assets, as he sees fit. On news of this possibility the stocks of these institutions rose dramatically late Thursday and yesterday. Assuming that this is enough to make most of the insolvent institutions solvent again, this will allow them to return to business as usual and get the credit markets working smoothly again. If it’s not enough, presumably Congress will just be asked to increase the amount.

Of course the devil is in the details, especially those concerning how Secretary Paulson will distribute the $700 billion. The plan seems to be to bring this legislation to a vote within days, unlinked to anything that would change the way the finance industry operates, or change the incentives that led to the current disaster.

Personally I think that, as economic policy, this is a really bad idea, for a host of reasons I won’t go on about. But I’m no expert on these issues, so that opinion isn’t worth very much and it’s besides the point of this no-business-as-usual posting, which is the following:

The response to this that I have seen from Obama and the Democrats is extremely disturbing. Obama seems to be inclined to go along with this, as long as some aid to people who can’t afford their mortgages is tacked on. This also appears to be the attitude of the Democratic congressional leadership, which includes senators Schumer and Clinton, acting in their roles as representatives of the largest industry in New York City. On the other hand, McCain appears to be choosing to take the populist position of ranting against Wall Street. It is now a few short weeks until the election, and I believe this will be the defining issue that decides it. If Obama and the Democrats support this bailout of the financial industry and McCain resists it in populist terms, I think we’re in for four more years of irresponsible leadership. McCain has already done a good job of painting his opponent as an Eastern “elitist”, and I can’t believe he’s too stupid to take advantage of the opportunity the Democrats will hand him if they vote for this legislation.

So, call and write your congressional representatives and the Obama campaign now.

For good sources to follow this story, there are some excellent blogs, including Calculated Risk and Naked Capitalism. This is also the kind of story on which some of the mainstream media shines, so read the New York Times, Wall Street Journal, and Financial Times.

Update: I hope Obama is reading not the Sunday New York Times which seems to indicate that this bailout of New York’s main industry is essential, but Krugman’s blog instead.

Update: Maybe Krugman is reading Not Even Wrong….

My reading now of what is going on is that Obama and the Democrats are starting to get a clue, based on seeing a firestorm of oppostion to the bail-out. The danger that they would go along with it seems to be receding. They can read polls too….

There are two new particle theory blogs that I’ve noticed recently: Shores of the Dirac Sea, where David Berenstein and Moshe Rozali are blogging and the Physics Anti-Crackpot Blog, by an anonymous author at CERN. I don’t know who this last blogger is, but he joins his (or her) colleague Jester at Resonaances (who is anonymous, but not hard to figure out) in skepticism about supersymmetry. Maybe things at CERN-TH are such that anonymity is a good idea if you hold such opinions….

Also at CERN, news of progress on the LHC commissioning is here. It seems that after some initial quick successes, there’s no beam at the moment as they fix various problems with the machine.

Frank Wilczek doesn’t have a blog (although his wife Betsy Devine does), but he does now have a web-site, as well as another web-site for his new book The Lightness of Being. Here’s a summary of the book, and a sample chapter, which gives you an idea what he’s trying to do with the book.

The IAS has started to put some lectures on-line, including the latest summer school on string theory and the memorial for Selberg.

The Harvard physics department now is running a video archive. It includes video of their recent Colloquia, Loeb lectures, and Sydney Coleman’s quantum field theory course.

For the latest on INSPIRE, SCOAP³, and potential changes in how the on-line physics literature works, see this interview with DESY’s Annette Holkamp (via Travis Brooks at Symmetry Breaking).

Update: There seems to have been some sort of problem in Sector 34 triggered by powering tests for operation at 5 TeV. This caused a large helium leak in the tunnel, an investigation is under way. More here.

Update: The news from the LHC is pretty bad. A failure during a powering test will require warming up the entire sector to fix the problem, then cooling it back down. This means that it will be another two months before beam commissioning efforts can start again, likely pushing physics collisions off until next spring, after the winter shutdown. There’s a press release here.

Some wag at the Wall Street Journal put the headline Don’t Buy Into the Supercollider Hype on today’s Op-Ed piece by Michio Kaku about the LHC, which describes its significance as follows:

The LHC might shed light on the “theory of everything,” a single theory which can explain all fundamental forces of the universe, a theory which eluded Albert Einstein for the last 30 years of his life. This is the Holy Grail of physics. Einstein hoped it would allow us to “read the Mind of God.”

Today, the leading (and only) candidate for this fabled theory of everything is called “string theory,” which is what I do for for a living. Our visible universe, according to this theory, represents only the lowest vibration of tiny vibrating strings. The LHC might find something called “sparticles,” or super particles, which represent higher vibrations of the string. If so, the LHC might even verify the existence of higher dimensions of space-time, which would truly be an earth-shaking discovery.

If I were an experimentalist or accelerator scientist working on the LHC, I might have a problem with the fact that the biggest media outlets are having theorists, often string theorists, be the ones to tell the public about the LHC (yesterday was Brian Greene’s turn, in the New York Times). Many such stories imply that the LHC will somehow tell us something about string theory, while even one of the blogosphere’s most enthusiastic string theory supporters puts the probability of this at about half of one-percent.

For some hype-free LHC predictions based on serious science that I fully endorse, see Resonaances, where the probability of seeing anything relevant to string theory isn’t even listed, and supersymmetry is given a one-tenth of one percent chance, on the grounds:

1% is a typical fine-tuning of susy models, and the additional factor of .1 is because it makes me puke.

which seems about right. The probability of the LHC producing black holes is given as something exponentially small, somewhat less than the probability of producing dragons.

This week the Perimeter Institute is hosting an unusual conference on Science in the 21st Century. One of the organizers is Sabine Hossenfelder, who has a posting discussing the conference here, and may have some more about it at her blog later.

Many of the talks are now available on-line here. I’ve only had time to watch a couple of them, but one that I found worth paying attention to was Lee Smolin’s. He covered some of the same issues discussed in his book, including the question of what science is, the ethics of how it is pursued, and the difficulties of encouraging new ideas. The discussion with the audience was also quite fascinating, including an exchange about differences between the American and British academic systems, with a British participant describing his shock at seeing how much the “American academic system is a training in sycophancy”.

The topic of blogs came up mainly in a section where Smolin discussed the ethical importance of scientists putting their name and reputation behind what they have to say about their science. He characterized anonymous criticism as one of the main reasons for the low signal/noise ratio and nasty environment of the comment sections of many blogs, describing this as far worse than anything he had encountered in his professional career, and something that is giving science a bad name. The theoretical physics group at Harvard in the 1970s was given as an example of about the worst it could get in academia. At the end of the discussion session, Paul Ginsparg took him to task about this, saying that he had been there too and it wasn’t that bad. I was there at the same time as both of them, and remember it as a rather unfriendly environment with a quite high arrogance level. But, with faculty like Coleman, Weinberg, Glashow, and postdocs like Witten, the talent and accomplishments of the people involved seemed to justify quite a bit of arrogance.

Ginsparg went on to agree with Smolin about anonymity on blogs, comparing trying to have a serious discussion in such an environment to trying to do so in a Fellini movie, being attacked by dwarves wearing masks.

Update: One talk I highly recommend is that of Eric Weinstein, with the title Sheldon Glashow Owes me a Dollar (and 17 years of interest): What happens in the marketplace of ideas when the endless frontier meets the efficient frontier? Eric’s talk includes a wide variety of thought-provoking and entertaining attempts to bring ideas from economics and finance into thinking about how science gets done and whether it can be done more efficiently.

There’s a media storm about the LHC building up as CERN makes last minute preparations to circulate a first beam in the machine. Cosmic Variance has live-blogging about this by a group of theorists, and Tommaso Dorigo will be in the CMS control room. He just might blog about this. For up-to-the-minute news, try the LHC beam commissioning site. Here’s the plan for tomorrow, and the latest news: they’re ready to get started at 6am tomorrow Geneva time. I’ll be asleep.

Starting tomorrow, daily news reports about progress should appear here. They’ve got a very detailed plan for steps to go through, here’s where they are now, here’s where they hope to be Thursday and Friday.

Roger Highfield has gone out and asked several theorists for LHC predictions, with the following results.

About supersymmetry:

About the Higgs:

(anyone know who took the other side of that bet?)

John March-Russell goes all-out:

…our quest for a source of almost unlimited climate-friendly energy might be answered by the creation of exotic unstable, but long-lived, charged particles… It might also turn out that the number of space and time dimensions is ambiguous…

The first attempt to circulate a beam in the LHC is still set for next Wednesday, and the media is already full of LHC stories, with a lot more to come next week. Events are being organized all over the world to celebrate the day, including a 1:30 am pajama party at Fermilab (see here). Today’s Wall Street Journal carries a page one story about preparations at CERN that focus on improvisational comedy training for physicists to help them communicate.

For more serious news from the LHC, you can try following progress at CERN’s startup site for the public, or at the technical LHC commissioning site. Latest available minutes from the Installation and Commissioning Committee are here, including a timeline and objectives for the next few days and for September 10. The “also going on” column for September 10 lists just “chaos”.

Science magazine has some excellent LHC-related stories in this week’s issue. In this one, various people explain what the LHC is looking for and why it will take a while to get results. Gordy Kane is having none of that though, predicting discovery of supersymmetry next month:

“We predict a signature that they could see with five events,” says Michigan’s Kane. “They could see it in the first week of running in October.”

Another article, Researchers, Place Your Bets!, features bloggers Tommaso Dorigo and Jacques Distler. Tommaso has bet that the LHC will see no deviations from the standard model, although from what I remember, he did this just because if this happens it will be so depressing that at least some cash will cheer him up. Gordy Kane and Stuart Raby claim supersymmetry is such a sure thing that they can’t find anyone who will bet against it. Distler’s comment on this is:

I wonder how hard they tried.

The same article gives links to sites where you can bet on the Higgs boson discovery date.

Nature magazine is running an LHC-related editorial Cool Philosophies in this week’s issue. It is inspired by an interesting recent preprint by philosopher of science Alexei Grinbaum: On the eve of the LHC: conceptual questions in high-energy physics. Grinbaum gives an extensive discussion of the current state of particle theory and its societal context. He ends with a philosophical section on fine-tuning and currently popular anthropic arguments, arguing that these often invoke an invalid use of counterfactuals.

There were some comments about this in a previous posting, but I thought it worth remarking on the unusual situation that papers have started to appear reproducing plots of new data from the PAMELA satellite, even though no such data has been officially released.

This all seems to have started with a July 31 talk at ICHEP 2008, with slides here, but evidently some other slides of preliminary data were flashed on the screen. There was a news story in Nature about this, but still no official release of data. Then, on August 20th there was this talk at idm2008, with no slides made available on-line, but interesting slides again flashed. Evidently some enterprising theorist decided to do some of his or her own data acquisition.

Soon, a preprint on Minimal Dark Matter predictions and the PAMELA positron excess was on the arXiv, complete with PAMELA data, with the notation:

the preliminary data points for positron and antiproton fluxes plotted in our figures have been extracted from a photo of the slides taken during the talk, and can thereby slightly differ from the data that the PAMELA collaboration will officially publish.

There are now at least two other papers on the arXiv featuring PAMELA data, evidently from the same source, here and here. Andrew Jaffe has a new blog posting up entitled Stealing Data? where he expresses discomfort with this situation. I can’t quite see that one is “stealing” data if it is being presented at major conferences.

Are there any of my readers out there who can tell us what’s up with PAMELA?

Update: Nature has a new article about PAMELA being “outed by paparazzi physicists”. One of the paparazzi, Marco Cirelli, is quoted as saying that “we had our digital cameras ready”, and claiming that the PAMELA people at the conference didn’t have a problem with this. On the other hand, a PAMELA PI is quoted as being “very, very upset” about this.

And I should have linked earlier to this posting at Resonaances: Hot Photos of PAMELA.

Update: According to Science News, the problem is not a Nature embargo. They just haven’t finished a paper yet:

“We plan to have final results ready by early October and submit a paper to a peer-reviewed journal,” Boezio told Science News. Until then, he says, the findings remain preliminary, and “We prefer to withhold further comments.”

There’s a conference at Harvard this week celebrating (somewhat early) the 60th birthday of the geometer Shing-Tung Yau. Since I was passing through Cambridge on the way back from a short vacation, I managed to catch a few of the talks, including two quite nice ones on mathematical physics from Is Singer and Edward Witten.

Singer’s talk was entitled “The Interface between Geometry and Physics, 1967-2007”, and summarized some of the advances in this area that he has been involved with over the years. 1967 was the year of a Battelle conference in Seattle on the intersection of mathematics and physics, organized by DeWitt [2/12/21: Chris DeWitt tells me this was Cecile DeWitt-Morette] and Wheeler. Singer displayed a copy of a 1966 letter from Feynman to Wheeler turning down an invitation to attend, with the explanation

I am not interested in what today’s mathematicians find interesting.

At the 1967 conference Robert Geroch talked on the topic of singularities in GR, and Singer recalled inviting Geroch to talk at the 1973 geometry conference at Stanford on this topic and the positive mass conjecture. By 1975 Singer had learned from Jim Simons at Stony Brook that non-abelian gauge fields were exactly the connections on principal G-bundles studied by mathematicians. The news of the BPST instanton solution and its significance for physics caused him to seriously start working in this area, work conducted with Hitchin and Atiyah at Oxford. They made use of the index theorem to both calculate the dimension of the moduli space of instantons, and to show that the Dirac operator had zero-modes in instanton backgrounds. Later, Atiyah and Singer interpreted the local gauge anomaly using the farmilies index theorem.

Just as Atiyah did at his recent talk at the Bott conference, Singer interspersed his historical talk with remarks identifying unsolved problems that he thinks are worth attention. The first of these has to do with K-theory, extended to depend not just on vector bundles, but on vector bundles with connection. Here the open problem has to do with the analog of the families index theorem. There’s a topological index (that takes values in the extended K-theory of the family), and the open problem is to define an appropriate analytical index and show topological=analytical equality. Singer had been hoping to have some new results to report on this, but he says that things turned out to be trickier than he had expected, so maybe he’ll have an answer at Yau’s 65th birthday.

The next topic was that of quantum Yang-Mills theory and the Millennium problem of proving the existence of a mass gap. Singer talked mainly about 2+1 YM, his conversations with Feynman about this, and his hopes that the positivity of the sectional curvature of the natural Riemannian connection on the space of gauge potentials modulo gauge transformations could be exploited to prove that there must be a mass gap. Proving this in 2+1d was his second open problem.

His final topic was mirror symmetry and S-duality. Here he speculated that this (and M-theory in general) might have something to do with a phenomenon from operator algebra theory. Unlike for N by N matrices, where all maximal abelian subalgebras of self-adjoint operators are conjugate, for certain C* algebras (rings of operators of type II), there are inequivalent such maximal abelian subalgebras. I gather that his idea is that these might correspond to the existence of lots of inequivalent limits of M-theory.

The next morning Witten gave a talk on quantum Yang-Mills and the Millennium problem, saying that this was in response to a request from Yau to explain at a basic level to a wide mathematical audience what this is about. He gave an extremely lucid explanation of the mass gap problem, taking the Hamiltonian point of view. This supplements what he and Jaffe did in the official write-up of the problem, which deals more with the Euclidean picture. As motivation, he explained in detail what happens in the Abelian case, where one can compute everything and there is no mass gap. The audience was appreciative and I think got something out of this, unlike quite a few talks of physicists to mathematicians, which tend to start at much too high a level of complexity, ensuring that only experts can follow.

Witten avoided one aspect of this problem, the one that most fascinates me, that of how you handle the gauge symmetry. In the Abelian case there are several equivalent ways of doing this, but in the non-Abelian case, at least in the continuum, one needs to understand BRST symmetry non-perturbatively, and this remains a difficult problem, one with deep connections to open problems in mathematics.