A (really) bad analogy

This week I have spent most of my time researching on the bailouts practice in America. The Central Bank, as many people agree, has a role as the lender of last resort who is willing to provide liquidity to an illiquid bank. By rough definition, there are two types of "bad" banks: the insolvent one, and the illiquid one. The latter is "less bad" than the former. A bank is insolvent when its assets value goes down, hence its net worth becomes negative. This is often because a bank is imprudent in its lending, resulting in a big portion of non-performing debts on its asset side. During crisis time, when these assets go down in value enough, a bank becomes insolvent. In theory, this type of bad bank does not deserve help, and should take the bad consequence as punishment in the competitive environment. Alternatively, a bank can be illiquid, which means that it is just unlucky that many people, for unconvincing reasons, show up to demand cash at the same time. This bank deserves help, since it has done nothing wrong. The problem is, it is often hard to distinguish an illiquid (unlucky) bank, and an insolvent (bad) bank. Hence, the government, even with good intention, may end up bailing out the bad bank as well.

To make a really bad analogy, in research, there is an unmotivated researcher, and a bad researcher. An unmotivated researcher, like an illiquid bank, generally is a decent researcher who does nothing wrong, and he is just unlucky that no idea comes up at a particular point of time. A bad researcher, on the other hand, takes on many imprudent actions (not trying hard enough, not having the brain to be a researcher, etc.) and simply deserves to fail and be kicked out of the field. Now, that's me right now. It's not clear to me which type I am.

Let's hope I'm the unmotivated one.

Look up

This article (Look Up), share by a friend of mine, hit me hard, from the first sentence: "People don't look up". At that very moment, I asked myself: "Do I look up?". Well, sometimes I don't.

Thirty minutes ago, I got out of the exam room and felt grumpy about not being able to do what I thought I could. Not doing well (or at least, as well as I expected) in exams here at Princeton is no longer a surprise to me; yet it upsets me every time.  As a (bad) habit, I told two friends whom I met on the way home: "I just want to die now". As a (bad) habit, I often thought of not getting a good grade for a class and, (a worse habit) consequently, I worried about not getting into grad school, and (my worst habit) I started to wonder how I would achieve my life goals in that scenario. This happens every time. I don't know since when my mind has started to have the illusion that my life is perfectly arranged on a straight line, and my only job is to make sure that I walk on that line. Apparently it's an illusion; it's not how life works.

How does it work, then?

It fails me sometimes. Many times.
It makes me struggle, and after all the effort, it leaves me with nothing, sometimes.
It tricks me into thinking I've got it all under control, then it tells me "who do you think you are?".

Those are the times when I don't look up. Those are the times I would just stop believing in my ideals for a while, stop trusting my ability. Those are the times that people around just seem like giants, so grand, so great, so brilliant that I would never be able to catch up. I don't know why even though I knew I should not feel this way, yet I do it anyway every time life fails me. Why though? There are many other things which I'm strong at, and these exams are not the only thing that defines me, nor my success, nor my failure.

After all, these sound like I'm trying to make up excuses for failing an exam. Well, there's no excuse for failing, yet there's also no excuse for overlooking the bright side of a failure. Just like an economist put it: "Don't let a recession go to waste", I will try harder. I'll look Up.

A Note on What Economists Do

Yesterday two people (who are knowledgeable and important to me) implicitly "questioned" me the role of economists in the world. One of them, upon hearing that I'm taking a course on financial credit in the macroeconomy with Nobuhiro Kiyotaki, challenged me why economists could not predict the Great Recession; the other one simply told me "with the current situation, economists aren't doing so well right now". Well, there are certain truth in what was said, though there is also misunderstanding in what, in my opinion, economists actually do.

First, the myth about "prediction". Much of the public believes that professional economists should be able to foresee the looming crises (financial crises, banking crises, currency crises, etc.), though, first of all, it must be said that predicting the future was never the specialty of economists. The complexity and the fast-pace innovations in the world leave economists with too little time to make any precise prediction. Before any careful models of the world could be formulated, new factors have already changed drastically the structure of the world. Not that they did not know the potential troubles that financial inventions like MBS, CDS or CDO could bring about; it's just that no one could make a clear statement on WHEN the negative effects would actually arrive, and HOW BIG those effects are.

That leads to a further question "So what can economists actually do? Why bother studying economics at all?" It's completely understandable why someone could ask this kind of questions, though asking them implicitly implies denying all the things that economists did in the past. While a not-too-small fraction of economists try to write articles about the future (and cross their fingers, hoping that if they are consistent with their ideas long enough, the future would EVENTUALLY arrive), I think a far more important and well-done job that economists did was to study the history and design suitable mechanisms to make sure that the bad history does not repeat. (Mechanism design here is the key purpose!). For instance, little did those who blame economists take into account the Quiet Period with little amount of financial crises, the mobile auctions that earn unbelievable revenue for many governments in Europe and the US, and other achievements that none other than economists engineered.

Like any other science, there is a limit to what economists can do, and of course, at times like this people are leaning towards blaming and accusing faults rather than making constructive statements. Realizing what economists are supposed to do (instead of fortune telling), however, may help adjust expectation to the correct direction.

Letter at 2 A.M.

This post will be a short one. In fact, I want to say some words of apology to someone:

I'm sorry that I made you worried. I never meant to. It's just that not seeing you for too long makes me feel insecure, even though I should have never doubted our friendship. I seriously had mixed feelings that night, and when I was fed with the idea that even the ONE and ONLY person that I thought I truly know well at this place is holding back from me, that was the most terrible and inexpressible emotion. In any case, thank you for the package, and thank you for clarifying. I surely will need some snacks while doing my 6 psets.

In case someone wonders why I wrote this publicly, let me explain. I had the option of running to your room and apologizing, but that would involve waking you up at 2am. I also had the option of sending you a facebook message, but that's lame. I wrote this here because this blog is my collection of reminders, and I don't want to repeat this mistake ever, so I figured if I wrote the apology down here, I would never forget.

Vu.

Choice Under Uncertainty

First, I must thank all the people who have been very supportive to my decision. You all are a very important  part of my life, and it's nice to know that I've got firm support wherever I go.

I'm writing this entry not to try to convince everyone that leaving Princeton to study at LSE for one full year is a good idea; in fact, I'm not so sure either. Facing an opportunity is not all about excitement, but also doubt, fear and uncertainty. For various reasons related to my post-graduation plan that I opt not to elaborate here, perhaps it's better (or at least more convenient) for me to stay at Princeton. When we were younger, participating in a program abroad is somehow a legitimate excuse/chance for vacations, and I still know people who do so. Now, it's a different story. Sophomore year in college is already the transition to a life where every step I take determine my future.

I must step carefully.

But how do I know if a step is right? Well, the short answer is "I don't know". No one knows. Nunca se sabe. During the Princeton Halftime Retreat, I was informed of a quote: "We can't connect the dots looking forwards; we can only connect the dots looking backwards". Steve Jobs said it, and I agree. So far, my life algorithm has been: 1) Pick a path, 2) Walk along that path, and 3) At the end of the path, due to the completeness, it was either a good path choice, or a bad one. There's always much uncertainty. I won't know how right/correct this choice is until I stand at the end of the journey looking back. Yes, things can go wrong. (In fact, things go wrong all the time.), but there's a chance that ignoring a potential path is already a wrong choice.

In any case, I understand this might have been the worst entry ever written. My mind is not that clear at this point. Two things for sure though:
1) I will miss Princeton A LOT, and
2) I still believe life is what you make out of it.

Good luck to everyone, for whatever amazing things you are expecting.

Halftime Retreat 2012

The best things in your life do not always occur intentionally. Quite the contrary. Sometimes, what you least expect to be at all meaningful turns out amazing - and Princeton Halftime Retreat 2012 was one of them. The trip was organized by ODUS (Princeton Office of the Dean of Undergraduate Students) to give Princeton sophomores a chance to reflect on their time (three semesters) at Princeton. Never a fan of group life reflection, I signed up for this trip only because I have absolutely no other alternative to spending my Intercession week at Princeton (which would make me die of boredom). The morning I was supposed to depart for the trip, I was still reluctant of my decision, and my stupidity level reached its peak when I decided to check my final grades. 5 minutes before the trip: I decided not to go.

I called a friend. Freaked out. Grades are bad, and future is gone (or so I thought); I freaked out. In a few minutes, she convinced me to go on the trip and get away from Princeton, so I ended up being on a bus taking me on a journey that I was very uncertain about joining. Heck, I put the sadness aside and try to mingle with a group of 20+ Princeton sophomores most of whom I had never seen before. Little do people know/recognize this, but I have a slight fear/anxiety of crowds and making new friends. I do. 

This group, unexpectedly, never gave me that anxiety. How so? They made me feel secured. I know many people who are very outgoing, yet never make me feel fully accepted into their friend list. This group is an exception. Even though the people were very different and not all people are outgoing, everyone was so willing to accept me into their world and not just exchange superficial conversations. Certainly, if I could only take one thing away from this experience, I would choose to keep the good memory that we had, from the reflection exercises, the conversations at meals to the Bowling night, Catchphrase and Mafia games. At the end of the trip, everyone has a common fear: once we go back to Princeton, we will forget and ignore each other again. Whether we can keep this relationship or not, I can't guarantee either. But, what I know for certain is, while relationships may fade, memories never die. I'll remember the 72 intense hours that we had.

From a personal perspective, this trip is very special to me because while I always vaguely remember who I am, why I do what I do and who/what is important to me, I never seriously think about them lately. When life kept pushing non-stop, it became hard for me to stop and think, again, of who I am, why I do what I do and who/what is important to me. This trip provides me a chance to do so, and it makes all the difference. When I only remember what's important to me, I live my life like a robot operating on a battery. Being able to think why the robot has to have/rely on that battery in the first place is far more important, because only then do I appreciate the battery. Yes, after this trip I appreciate everything in my life - my passion, my dream, my family, my friends, etc. - so much more. 

After this amazing trip, Princeton just grew so much more in me. Most important of all, Princeton offers me the chance to be surrounded by wonderful people, those who possess a unique personality, perspectives, academic passion, musical talents, strong determination to accomplish what they want and, on top of all, a big heart to include all people around them. Besides that, this trip reminds me of how much Princeton cares about each individual student. Had I applied and gone to, say, a school in UK, I would be looking for my own apartment, worrying about my meals, and when I feel sad/depressed, no one would be there for me (Please correct me if I'm understanding it wrong). That is perfectly acceptable, because we are all adults who can take care of ourselves. Princeton, however, goes beyond that. Princeton worries about you before you worry about yourself. At a research university at Princeton, it could be hard to believe that the school cares so much more about a student than his ability to earn high GPA or do research; but it does care. SO MUCH.

Bottom line: Princeton cares about how I am feeling, and that's AWESOME.

I won't say much more, because I have a far more important thing to do than writing this blog post. That is, I must implement what I said I would during the trip to better my life, improve my happiness level and satisfaction. I'll end this note on a quote: "You usually say "I'll be happy after I graduate. I'll be happy after I get a car. But, don't wait for the next time to be happy. Be happy NOW."

Seriously, my happiness level NOW is indescribable. Thank you.

A Dinner with Professor Socolow about Sustainable Development

"So, why are you all here? What derived your interest in sustainable development?" - the Professor asked us. All of us were asked this question before, during the interview into this program, yet it still came as a surprise. Most presentations and lectures do not start with a personal question. Professor Socolow, Princeton's Professor of Mechanical and Aerospace Engineering, the expert in global carbon management , wanted his talk to be different.

Posing this question prior to any discussion, Professor Socolow really wanted to make sure we participate in this program by the interests that are as serious as the issue itself. Of course, we responded with quite a diversity of interests. While sustainable development was introduced to many of us through theoretical class works, field trips and foreign experiences, some others were interested in the issue because they had grown up observing the opposite - the consequences of unsustainable development, especially in developing countries such as Colombia, Vietnam, or Mexico. Sustainable development is undeniably multifaceted, hence, the term itself means differently to each of us. Sustainable development can range from environmental concerns, to governance in adaptation to scarce resources, to philosophy.

After we all had our turns, Professor Socolow slowly shared his own part of the story. Professor brought us fifty years back in time, when his career had just started, and when the world faced much different challenges from what we are facing currently. "Back in the day, our fear was for a bad ending of the Cold War; nuclear destruction was the most serious concern." In fact, the world seems so messy now that we seem to have forgotten how complicated it used to be fifty years ago. Professor Socolow reminded us of how the people of his generation told one another to keep the world in balance, and so they succeeded for fifty years. No massive destruction bomb was detonated since then, and the world seemed to handle its population growth somewhat successfully. The problem now is still an overwhelming population with scarce resources, nuclear threat and climate change. It is important, however, to realize that for decades, we have confronted each problem and done our best to prevent the worst scenario. Professor Socolow wanted us to do the same, to contemplate what we should do, to join our colleagues in making this world a better place. What Professor Socolow told us made me remember one similar quote by Nelson Mandela: "It always seems impossible until it's done."

The discussion moved around several interesting questions, mostly trying to (re)define our understanding of sustainable development. My favorite question was "why do developing countries, those that are currently on their way, keep repeating the mistakes that the developed countries had made?" Other students threw out explanations, ranging from dependence on old technology of developed countries, dependence on aid, lack of financial power, political rivalry/complexity, etc. The world does seem irrational after all; the more relationship and interdependence are built between countries, the more complicated and vulnerable the world becomes, the more impossible it is for the world to move as coherent parts. The discussion revealed one thing: we human beings have made such an easy question so hard to answer. Before ending the session, Professor Socolow cared to ask about our summer plan, our potential future path, and what we think Princeton University could do to better facilitate sustainable development. He, then, introduced us to available opportunities to work on addressing global challenges around the world.

Being a Physics professor, director of the University's Carbon Mitigation Initiative, member of the National Academy of Engineering, and author of many well-known publications about climate change and energy, Professor Socolow did not impress me by any of the aforementioned titles. He did not mention  his works much in his talks (which I had hoped he would), but I later on really appreciated what he did. I value the heart of a pioneer in solving world-problems, the ability to tell his own stories and inspire the young people to continue acting to protect this world we live in, and his guidance of the short-term steps we can take to achieve the long-term goal. Thank you Professor.