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PUBLIC QUANTITATIVE ANALYTICS: ASYMPTOTIC ORGANISATIONAL LAYOUTS

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a discussion of european issues of data quality & reliability

& a sketch of a roadmap to address such

 

 

The European Commission is not interested in the best interests of Greece or Greeks. So long as Barrosso and VanRompuy spin and spin and have Sarko and Merkel onside then the European Commission can serve its own interests entirely.

 

The problem, right now, is that Sarko & Merkel alongside Obama and Cameron have an Economic Nightmare on their hands, their private sector economies are flatlining. Dying on the Operating Table. Isn’t it strange sometimes when you meet a senior Brussels official: they don’t seem to really know there is a serious recession outside Schuman?

The (MS) Mission Statement of European Commission Directorate for Economic and Financial Affairs (DG ECFIN) states clearly that it is responsible for finding an economic solution to the present crisis. It’s doing a grand job at that eh? DG ECFIN, the MS continues is responsible for The Stability and Growth Pact (a treaty of the European Union) & the supporting ‘Excessive Deficits Procedure; (adopted, 1997). In short DG ECFIN had (& I believe, continues to have) “Quantitative Authority” at (European Ministerial) level!

 

The Stability and Growth Pact was adopted 14 years ago. Its objective was and remains “to enforce fiscal discipline in the EU” quantitatively. Since then DG ECFIN has been responsible for definitive macroeconomic figures. DG ECFIN has been responsible for estimating and assessing EU member states deficits; particularly public/fiscal but private sector too; for 14 years.

Obviously it never got that estimate right for Greece once in 14 years! Not even close obviously! How many revisions to estimates of Greek default factors have been published in the last 12 months? It’s embarrassing, turgid!

 

But it’s too important a number just to ignore in my view! The world economy (Stock Markets [Capital]) / ‘Employment Numbers’ (Labour) & Bond Markets will not stabilize on a ‘fair value’ floor until an equivalent price is found for Greek liabilities (public and private)! It’s that simple, it’s that important! Pivotal! For 14 years that number has been the purview of DG ECFIN. It seems that, not once did it get it right. One lesson from the depths of this depressingly slow burn Greek disheveling must be that on the quantitative side at least the European Commission was frequently wildly out on crucial figures for 14 years! It was so bad that it has taken the IMF several re-tries to get it right! We still don’t the right answer; all we get is Commission spin none of which makes any sense, even under strict change control.

 

Something needs to change, that’s for sure. I am not suggesting another organizational layer in addition to ratings agencies; I am thinking transparent here! Possibly after their inevitable demise. But under these circumstances, given the clear evidence over time surely a new organizational layout should be considered for this aspect of European Commission activity? Surely that much must be true? Evident. It will not just be ECFIN which suffers from diminished quantitative abilities in the whole Commission thing I would wager but ECFIN is rather ironic!

 

Doing Quantitative Stuff accurately means doing it properly first time around not “falderal” in big meeting rooms with laptops. Investing in it properly, modeling over time; requires ‘proper’ Computing Power. Actually being able to execute and test in one day DOES make a difference to everyone from the beginning. Particularly when one does have to engage colleagues who may not be as mathematically literate as necessary in the first instance. But that is just the way it is today; there is a set with an undefined taxonomy of complex statistical values which constitutes a fundamental ‘social value’ today - such as the real true extent of Greek deficits which the public, the citizenry of Europe, have a right to know, accurately.

 

Such numbers need to be ‘Right First Time’; OTM. They should be Open Public Data and reliable. Even the Discovery Process should be published. Effectively ‘Open Source’ should be deployed so that everyone agrees what the numbers mean! At least.

I said at the top; a new organizational layout is needed for quantitative activity in DG ECFIN & the EU Commission generally I suspect which injects some private sector thinking into the process but considers ‘Open Source’. The lack of reliable historic values will be one hurdle the current process is jumping over, so the quicker it gets fixed the better.

 

But more than that we should all care about the accuracy of numbers produced by publicly accountable bodies who after all collect most data anyway. Some of these numbers do matter and will matter increasingly at a level as fundamental as on social justice basis. So we should care about these important numbers & if the public sector process is or is perceived to be sub-optimal then maybe some private sector support “burden sharing” which could be more transparent is the way to go.

 

KEYWORDS: ANALYTICS VALUATION GREECE FAILURE SOLUTION ASYMPTOTIX

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