Execs rip financial engineers, praise real engineers at NIWeek

Well, wall street and the MBA schools are a herd mentality. Lack of solid engineering tools (math, science, physics etc) leads to poor decision making - look at the fall of Motorola as a great example! Short term goals and profiteering by boards of directors and upper management and VOILA!! Poor performance results. Heck, ask an MBA how he looks at engineers. The MBA mindset is: "they are just interchangeable blocks; an American engineer can easily be replaced by 5 Inidan engineers or 10 Chinese engineers (with no engineering experience) for the same cost! And they wonder why productivity and profits are down??

To the fellow that thinks these guys failed engineering school, to be a quant, they typically look for phd's in an engineering discipline, math or statistics. A lot of them (probably all of them) knew the models were worthless but there is no reward for whistle blowers, as long as everyone was lining their pockets, better to keep your mouth shut and make money. Beginning with the Gramm-Leach-Bliley and Commodity Futures Modernization Acts, it looks like this entire situation was another premeditated fleecing of the middle class, with the taxpayer left holding the bag (again). You don't even need to have a background in businees to realize that when you lend money to people that can't pay it back, the majority won't. Even Stevie Wonder could see that....... I've an electrical engineer with 17 years experience, finishing up my MBA this semester, probably going to going to continue for financial engineering, I'm tired of performing the best work I can for a pitance, maybe in the future I can start getting paid at least....

Now, let's see 'em put their money where their mouth is. There are a lot of real engineers in the US who are out of work and apparently not even in demand any more. All job postings are very specialized and requiring at least 5 years experience in the specialty (read no tolerance for training time and weeding out as many resumes as possible). Looks like the bean counters are still in control. And why not? Good engineering help is available in India and China and elsewhere for cheap.

For the financial "engineers", it's not about creating wealth...it's all about transferring it from other folks' pockets to the pockets of the folks they serve. They have never expanded the wealth base one iota, because as has been pointed out they have never actually created anything new of value. It was all a giant Ponzi scheme. The solution to this is not (as some of the current rulers think) to view wealth creation as evil. The solution is to return to real capitalism--creating new THINGS of value that people want and are willing to work for. Creating THINGS requires REAL engineers, and REAL technicians, and REAL educators...not the ersatz versions that we have too many of.

I take exception to the use of the word 'engineer' in relation to financial people. When it gets down to the nitty-gritty they are just con-artists out to improve themselves at the expense of others and should be termed as such.

What is the nature of real wealth? Here is a test! If we are producing real wealth, our employees should be willing to take home some of the products, if offered, as a part of their pay. Agriculture, Mining, Manufacturing definitely pass this test. How many employees of the so-called post agricultural, post manufacturing information and service businesses will accept software CDs and the like as a significant part of their pay! How many of them now, count the wealth they possess in terms of information products in the form CDs and information manuals? Surely, they count their farm land, dwelling, jewelry, automobiles as significant part of their material wealth. The information and service businesses can only exist as enablers for the producers of real wealth – Agriculture, Mining and Manufacturing. The latter can do without the explicit information economy. Because implicit knowledge and information is embedded in people’s natural intelligence as well as in nature itself. With this perspective, our nation’s core competence in the real wealth producing resources has to be carefully protected and enhanced. So also, our competence in enabling resources should be made adequate. Only then our people’s overall well being can be realized and sustained with dignity.

I believe it is a misconception when we treat the economy as an inanimate object, a thing, and then pretend the actors in the economy (that's us) are the free agents. Under this illusion, it becomes the job of the agents to "pump" the economy (the thing) to maximize the output. That is what leads the financial people to develop their equations and pretend they have modeled something real. They have forgotten one simple fact - that the market is not a thing but instead is a competition. There is no inanimate thing that is the market, and that is why it will never be modeled adequately. The market is comprised of other competitors striving to do exactly what we are trying to do. And he who does it best wins, and he who does it second best loses. So instead of saying our models are too simplistic, it would be better to say that models are not appropriate here. As soon as our models are improved with the additional complexity they require, then our competitors will also have those more complex models, and they will still provide us the competition that will befuddle us. I suppose the end result is supposed to be a more efficient market, but that doesn't seem to happen. I think Buffett would say that the difference is that the so called "financial engineers" (I bristle at the term) are relying on their cleverness to outwit the market, but the a better use of all that talent would be to rely on a more principles based approach - stop speculating and return to investing. The investor doesn't have need for financial models, or at least he uses the models in a different way. So stop looking into equations for the answer, else, may the best man win.

I like his comments. As expected, because they failed engineering school and transferred to business and still "want to be" "Real Engineer". They should be back to school and get their "real" engineering degree..

I'm sorry. You must be under the mistaken impression that the goal of Wall Street it to accurately model the economy. A common misconception amongst "real engineers". The actual goal is to maximize their paychecks and if they can do this by convincing everyone else their models/analysis are correct and we should proceed in direction x or y, then their goals are accomplished. Unlike us, their goal is NOT to create a control system with settling time < x ms, or to design a car that gets 100mpg, UNLESS that is along the path to maximizing their paycheck. Kudos to them for extending the frenzy and hipeduring the bubble, then sandbagging to maximize bonuses. Looks like they won both times. Fool me once, ....

Your system predicates the output. If you have a well run company, it will attract good people and generally net out good things. If you corrupt your system, and allow it to be gamed, then expect bad things. The American system has been corrupted by the 16'th and 17'th ammendments. The Fed Reserve Act and overturning Glass Steagal in 1999 didn't help. The financial wizards (mostly Harvard alumni it seems) are just the latest manifestation of termites determined to eat away at our countries institutions. Real engineers create real wealth with innovaton and creativity. Paper dollars are only a shadow representation of real wealth. Real wealth is land,production,ingenuity,infrastructure etc. Money supply should stay in balance with actual wealth to prevent inflation of deflation. Don't be confused by the wizards, when at root banking and money is simple.

There are mathematical methods for dealing with uncertainty and innacuracy. Too bad Wall Street doesn't use them. I think they would show that the information we have isn't worthwhile more than a few days out.

The Finacial Engineers created the bubble and messed up the economy. Then in a panic, they put out lots of low Earning Estimates. Now 75% of S&P companies beat the Estimates so that the Finacial Engineers rake in more money. Very funny! They are the players, and their own referees. And worst of all, they have no clue what they are doing. I bet they will continue to do the same for the next 20 years.