The more voluminous data is, and the faster it is transmitted, the faster we can be sent over a cliff.

Sir, Robin Wigglesworth writes: “The amount of digital data around the world is unimaginably vast. As more of our social and economic activity migrates online, the quantity and quality is going to increase exponentially. The potential is mind-boggling”,“Big Data’s power to illuminate leaves public sector in the shadows” April 20.

In April 2003, when as an Executive Director of the World Bank I formally commented on its strategic plan I wrote: "Nowadays, when information is just too voluminous and fast to handle, market or authorities have decided to delegate the evaluation of it into the hands of much fewer players such as the credit rating agencies. This will, almost by definition, introduce systemic risks in the market"

And it sure happened. The AAA rated securities backed with mortgage to the subprime sector in the US, send us straight into the 2007/08 crisis. 

In other words it is not just a question of data availability, in real time, but also on how we respond to it. It might behoove us all, to take a long time to digest it, before we react to it.

For example, and I quote from a BBC report: “On the 26 of September 1983, in the early hours of the morning, the Soviet Union's early-warning systems detected an incoming missile strike from the United States. Computer readouts suggested several missiles had been launched. The protocol for the Soviet military would have been to retaliate with a nuclear attack of its own. But duty officer Stanislav Petrov - whose job it was to register apparent enemy missile launches - decided not to report them to his superiors, and instead dismissed them as a false alarm. This was a breach of his instructions, a dereliction of duty. The safe thing to do would have been to pass the responsibility on, to refer up. But his decision may have saved the world.”

Sir, so what delay factor do we need to introduce before we respond to any real time data? I have no idea. You tell me.

@PerKurowski

The Basel Committee for Banking Supervision was sold a regulatory algorithm that used the wrong data.

Sir, Richard Waters writes: “a new layer of technology is being added to turn [big data] into the learning that makes applications more intelligent. It represents an emerging tech infrastructure that makes AI (artificial intelligence) not just a new application but a new approach to computing.” “Crowdsourced algorithms promise to be next big thing” March 24.

I register again, for the umpteenth time, the following comment:

Bank regulators, when they defined their risk weighted capital requirements for banks, which so much influences the allocation of bank credit to the real economy, looked at the risk of the assets, and not at the risk those assets posed to the bank system.

As a result they came up with that loony theory that what is perceived as very safe, is safer for the banking system that what is perceived as risky. That’s why they assigned only a 20% risk weight to what can be so dangerous as what is rated AAA to AA, and 150% to the so totally innocuous below BB-rated.

That caused a crisis because of excessive exposures to what was rated AAA; and low growth because of lack of exposures to what is perceived as risky, like to the 100% risk weighted SMEs and entreprenuers.

Sir, that is why all algorithms being developed should be required to carry a warning signed saying “Applying this to the wrong data, can be truly disastrous”

@PerKurowski

Holy moly, some will be paying MIT $75.000 for learning techniques on how to hunt us down.

Sir, Adam Jones writes that some “will pay $75,000 in tuition fees for their Master of Business Analytics degree, with “Applied Probability”, “MIT’s $75,000 finishing school for Big Data” March 21.

And Jake Cohen, senior associate dean for MIT Sloan undergraduate and masters programs says: “The return on investment we expect to be very high [for those who take the course]”

That is more than clear evidence that we, the hunted, the main suppliers of “Big Data”, need to urgently defend ourselves.

Before these hunting licenses are awarded, we should get a copyright over our own personal preferences and lives, so to at least have something to negotiate with.

@PerKurowski ©

If we get a copyright on our own personal data and preferences, then we have something to trade with.

Sir, I refer to Edward Luce’s “Big Data’s infinite harvest” May 25.

In it Luce asks “Should we charge Big Data for our personal data?” And my answer to that has for quite some time been, even to FT, that we should at least get a copyright on our own personal data, so as to have something to trade with.

I recently bought a Tuxedo shirt on the web, and since then I have been receiving many offers on Tuxedo shirts on the social media where I socialize. It crowds my computer and, in doing so, it definitely affects negatively my possibilities of going on with the rest of my own virtual life, as well as intruding on other ads trying to reach my immense purchasing power :-)

And so I believe that if all these content providers had to share some of the ad revenue they got from targeting me, with me, the owner of my own preferences, then we could put some order in the house, an order that could even benefit our Big Brothers. Frankly, I think that any advertiser would love this idea, as that would guarantee that the ad recipient looks more favorable, or even looks, at his ad… of course current advertisers would initially not like it too much… until they understand that would benefit them too.

Now on the issue of information and searches, there I might be a little bit more radical. Because there I would request that at least 50 percent of all search results provided by Google should be provided on a totally pro-bono basis. That is because it is much too important for us to know what the poorer outliers might be thinking, and because we cannot afford our information needs to be satisfied solely by information lobbyist.

But clearly all this is just in its initial stages and developing.

@PerKurowski

If banks use “big data”, which is good, regulators must stay away from it.

Sir, I completely agree that banks should use all information available to make judgments on credit worthiness, as is described by Patrick Jenkins in “Big data lends new Zest to banks’ credit judgments” June 24. That can only help them to allocate credit better.

What I cannot accept though is that bank regulators should use precisely the same data to decide upon the capital requirements for banks… for two reasons.

First, by giving extra weight to information already cleared for, they can only distort the allocation of bank credit.

Second, Jenkins refers to “know your customer”, and in this respect it is important for regulators to remember that their concern should not be with the clients of banks defaulting, but with the banks defaulting, which is of course pas la même chose… as banks mostly default because of excessive exposures to what was erroneously perceived as absolutely safe.

How do we rein in runaway obsessions with data, like that of the Basel Committee?

Sir Tim Harford’s article “Big mistake?”, March 29, is just great.

When Harford mentions that “Google’s own search algorithm moved the goalpost when it began automatically suggesting diagnosis when people entered medical symptoms” he refers to the problem of knowing whether the data one looks at is original or is data which has resulted from the looking.

In other words when acting upon the data one interferes with the data. That is for instance what happened in the case of the Big Basel Committee Mistake.

Regulators looked at credit ratings and decided that when these were excellent, banks needed to hold less capital, and so banks then made higher risk adjusted returns on equity, and so the banks naturally rushed in to increase their holdings of these assets… so much that these assets very fast became very dangerous to the banking system as a whole, as in the case of AAA rated securities and Greece.

That to me was perfectly clear would happen when in January 2003 FT published a letter in which I said: “Everyone knows that, sooner or later, the ratings issued by the credit agencies are just a new breed of systemic error to be propagated at modern speeds. Friend, please consider that the world is tough enough as it is.”

Unfortunately since there is still little data that shows regulators have fully understood the problem, I wonder how Harford or anyone else suggest we reign in the runaway obsessions with data.