In Of Synthetic Finance we illustrated that the highly symmetrical and hyperfungible materiality of synthetic financial assets means that the progressive differentiation of our dynamical system of finance writ large signals a regressive differentiation of capital that is best understood as a becoming-topological of the financial asset.
So we know that (1) the topological consistency of synthetic finance is isomorphic to a biological mode of assembly, i.e. with so many untapped lock and key mechanisms, diffusion transport, and a set of radical divergent evolutionary capacities. And we also know that this contrasts with the industrial-style machine-like production of the assets of generic finance, which are obviously governed by a set of more rigid invariance requirements than the synthetic assets whose class of exchange has emerged from out of the former (e.g. if we are conservative about exchange, we will declare that credit derivatives are at base perverse -and why, if not because they allow for the achievement of symmetry between an object and its image of value, while we are demanding that so many of the object’s economic properties must remain invariant, especially the various collinearities of exchange that we outlined in Essay Two, our case study on the ontology of synthetic finance).
We also know that (2) the anexact but rigorous divergent evolutionary capacities of topological objects are best set into their contingent motions when an operator -a quasi-causal operator- begins to trace the logic of the intensive properties or processes not wholly covered over by the extensive properties to which they give rise (in the process of their own occlusion), and from there to the virtual, we tinker with that which structures the space of that which is possible to become actual. (You follow me, right?)
This means that we experiment. My favorite, at the moment, is to model the wholesale institutional outcomes of a universal synthetic CDO whose infinite leverage (in the tranching process of structured finance) is leveraged through a continuous recalibration in order to instantiate a nomadic distribution. Of course, as we’ve noted before, this is merely a guess, it may be wrong -in fact it probably is wrong, i.e. it will lead to a genetically-mutated new system, albeit and importantly so, a wholly nonviable one. But even if we’re wrong we’re wrong for the right reasons. That’s why we’ve been reading Winfree’s When Time Breaks Down, Prigogine’s work on the behavior of nonlinear dynamical systems, and especially Mario Bunge’s Causality in Modern Science. Yes, yes, of course, we need to get back to the technical literature on finance, and fuck it, we need to cover more of the history of finance, and of course we need to continue to trade -and you cant’ trade successfully for long without fusing research with logic and luck (all of which -especially luck- do take an awful lot of time, and more time, and more time….eh).
But just not quite yet….We need a few more months of reading/scavenging from the sciences of morphogenesis, we need to return to topology once again, and can we not afford to spend a mere few hundred more hours dwelling with Poincare on these topics in a lifetime of waiting for Godot or Guffman or reading books that should never have been written?
This is all a way of us trying to say we ran across a quote that captures the essence of where we’re going. You now kind of know how we got here. Here’s the quote:
‘The sciences of life have never been admired for quantitative exactitude . . . But it cannot be said that living things are at heart sloppy, fuzzy, inexact, and unscientific. How does an oceanic salmon find its way home to spawn on the very rivulet it left in Oregon three years earlier? How is a meter-long sequence of billions of nucleotide base-pairs reversibly coiled without entanglement into a nucleus no more than a few thousand base-pairs in diameter? How does anyone memorize a vocabulary and rules of grammar well enough to transfer an epic novel from one brain to another? How does a gymnast calculate forces and rates for hundreds of muscles with millisecond precision while whirling from one maneuver to the next? How does a mere mortal perform a piano concerto or compose one? Such miracles bespeak of reproducible precision. But that precision is not the kind we know how to write equations about, not the kind we can measure to eight decimal places. It is a more flexible exactitude which evades quantifying, like the exactitude of a cell’s plasma membrane dividing the universe into an inside and an outside with not even a virus-sized hole lost somewhere in all that convoluted expanse: topological exactitude, indifferent to quantitative details of shape, force, and time.’
— Arthur Winfree, When Time Breaks Down. The Three-Dimensional Dynamics of Electrochemical Waves and Cardiac Arrhythmias, Princeton University Press, 1987